How to develop a growth strategy for your business
Is your SME ready to grow? Do you want to take your business up to the next level? For some of you, it may be simple how you can now expand your business; it may be a case of opening up your next retail branch or expanding your product range. For others, it may not be so straightforward. Your business is now steady and you know you enjoy what you do and are good at it but unsure of what the next logical step should be or which direction would be more beneficial for your business. This is where the product market expansion grid can help you in identifying growth opportunities.
The grid can be used for planning by any company looking to increase the sale of its products either by expanding its product range or by entering new markets. Therefore, various strategies can be used and developed when comparing the two main factors of the grid, the product and the market. The grid can help you to decide the proper market expansion strategy giving you four options to take.
This is strategy for company growth by increasing sales of the current products to current market segments without changing the product. It could be that potential customers are aware of the product but due to one reason or another aren’t buying it. For new business, market penetration can be achieved by a combination of competitive pricing strategies, advertising and sales promotion. Market penetration for existing customers can be achieved by increasing their usage, for example, introducing loyalty schemes.
This is used when offering modified new products to your current market segment. This may be done because the sales of your current products have matured or you’ve identified new segments that you may have missed before. Even better, would be to introduce complementary products or services to kill two birds with one stone; boost the sales of a current product whilst at the same time increase revenue and product portfolio with the new.
Mercedes is an example of a company who did this successfully. Historically known for its larger luxury saloon cars, they entered the small car market with its A-class small family saloon and smart car. It was still targeting segments of the market that would want to pay a high price tag for a prestigious brand but offering them more options. If their customers wanted to purchase a small car, they would be able to stay with the brand as opposed to having to look for other options.
A strategy for company growth by identifying and developing new market segments for current company products. This could be geographically in terms of expanding your geographical reach; you could build a website to be able to reach consumers that you may not have been able to before in other parts of the country. You could expand internationally by exporting, but with this, you should bear in mind that a lot of factors should be taken into account on the suitability of your product and service for foreign markets.
This is when your company tries something completely new and targets a completely new market to whom you have currently. You’ll have to make sure you go back to basics for market research on the demands of the new market which will be different of your current target market one way or another. This is the most complicated strategy but if done correctly, could open up large revenue pots for your SME.
The most commonly used strategy for businesses will be market penetration as it’s the simplest; the market is slowly becoming very crowded with products and services being introduced daily into new and existing market segments. Market leading companies like Apple and Samsung have however demonstrated that to be ahead of the game, market and product development are vital. It should be noted that these decisions aren’t ones that can be made hastily overnight, lots of market research should be done along with the involvement of stakeholders. Bear in mind, that you not only need to develop strategies to grow your business portfolio but also by downsizing them. By shedding smaller unsuccessful activities, products and services, you can focus and re-calibrate on your core business making you grow even stronger.