Business Growth Strategies That Work

A business growth strategy is an action plan focused on increasing a company’s revenue and expanding its horizons. It can grow by employing a variety of techniques, based on its budget and competition. These methods can include reaching new customers, making product improvements, increasing market share, overcoming particular challenges, and more.

Business Growth Strategies

  1. Market penetration

Market penetration is a measure of how much a product or service is being used by target customers compared to the total estimated market for that product or service. Market penetration also relates to the number of potential customers that have purchased a specific company’s product instead of a competitor’s product. When implementing this strategy, you aren’t necessarily increasing the number of different products you offer. Instead, you’re getting your existing products or services in front of more people while offering a better value proposition.

What impacts—and is impacted by—a market penetration strategy?

  • Revenue, sales and profits
  • Number of customers
  • Share of market
  • Geographic presence

Product development — also called new product management — is a series of steps that includes the conceptualization, design, development and marketing of newly created or newly rebranded goods or services. Product development includes a product’s entire journey — from the initial idea to after its market release.

Casper, a direct-to-consumer mattress company, saw success with the product development model. The company started selling a single mattress that would be shipped to customers’ homes. Eventually, they expanded into a line of adjustable and modular bed frames.

These bed frames were different from the company’s original mattress line, but appealed to their customer—someone who orders a mattress through the mail and is likely in need of an easy-to-assemble, shippable bed frame as well.

What impacts—and is impacted by—a product development strategy?

  • Revenue, sales, and profits
  • Access to talent

Market development is a growth strategy that identifies and develops new market segments for current products. A development strategy targets non-buying customers in currently targeted segments. It also targets new customers in new segments.

Pursuing a market development strategy means that a business is expanding its footprint through geographic expansion or the creation of products and services that are complementary to current offerings.

Rather than focusing on product expansion in an existing market, as with market penetration, companies engaging a market development strategy will want to think of another offering that:

  • Is something their existing target customer segments are likely to adopt
  • Ideally uses some of the same core components, infrastructure, or resources
  • Is not yet restricted by another company’s domination in the market
  • Is located in a geographic area not yet serviced by a primary competitor

4. Diversification

Diversification strategy is applied when companies wish to grow. It is the practice of introducing a new product into your supply chain in order to increase profits. These products could be a new segment of the industry your company already occupies, known as business-level diversification.

What impacts—and is impacted by—a diversification strategy?

  • Revenue, sales, and profits
  • Company value
  • Access to talent
  • Share of market
  • Geographic presence

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