What are the Four Types of Growth Strategies?

Most startup companies desire to grow their brands and boost sales and revenue. However, there are specific techniques that companies adopt to integrate growth strategies into their long-term plans. The company will leverage these strategies based on its financial status, government regulation, and competition. 

An online writing service has stated that product development, acquisition, market penetration, and many others are examples of the most typical growth strategies. In this post, we will look at the four types of growth strategies and how they can help companies develop their brands. 

What Growth Strategy is 

A growth strategy is an initiative that allows you to boost your market share. In any case, a growth strategy does not target only short-term gains or profits but also aims at long-term ones. 

You will agree that business growth comes with numerous risks, especially in a fluctuating market. However, an effective growth strategy is one of the most secure plans to maximize profits and mitigate risks and unpleasant consequences. In the fast-growing economies of today, businesses need to utilize growth strategies for long-term survival. It's to avoid getting sidetracked by market fluctuations and other dynamic influences such as technology. 

The best essay writing service has stated that a growth strategy should comprise the “SOPP” elements. They include: 

  • Strategy: How do you intend to work around your goals and objectives?

  • Objective and Goal: What do you want to achieve?

  • Product: How will you optimize your product to help you reach your target?

  • People: How do your goals and tactics influence your 

employees? 

It would help if you communicated your growth strategies to your employees or co-workers, or teams. By doing so, everyone sings from the same song sheet. They can share their ideas and thoughts on the plan. The worst part of refusing to carry your teams along is that they will become uncomfortable with every growth strategy you try to adopt. They won’t feel confident about carrying out their assigned tasks. 

Of course, teams will feel that their outputs are indispensable to the brand’s success when you communicate your growth strategy clearly to them. 
 

 Four Types of Growth Strategies

Your brand will never evolve without growth. However, business development does not occur in a vacuum. There are four fantastic growth strategies you can utilize to expand your brand. Let’s quickly dive into them!

Product Development Tactic

Startup companies can benefit significantly from product development or integrating new features to attract existing customers. Perhaps, you are experiencing a steady drop in sales and revenue due to old-fashioned products or obsolete technology. If that is the case, it’s time to develop new products or enhance your services. 

The Coca-Cola Company is an excellent example of a company that earns massive rewards from employing the product development tactic. Here is it; the firm saw through their competitors as they faced a consistent drop in sales and used their observations to their advantage. The Coca-Cola Company introduced Cherry coke in 1985 to surpass competitors. As the first variant of the original drink, it caught the fancy of existing clients and appealed to the new ones. 

The real point is that when your products and services start to lose value, you need to work around it. How do you make it work?  It would help eliminate outdated products and launch newer updates to your existing clients as a jumping-off point. 

Hence, any businesses that no longer reach their targets can take advantage of product development tactics. But note that it’s crucial to test the waters first. Remember that pre-development research can make or mar your short-term or long-term goals. Do not throw your caution to the wind. 

Market Penetration Tactic

A market penetration tactic aims to promote both previous and new products to boost market share. Effective strategies include digital campaigns, furnishing discounts for bulk purchases, product packaging, and reducing prices to outperform competitors. 

You may think that price reduction doesn’t count in terms of a market penetration strategy.  Perhaps, you may have envisaged similar strategies from competitors. The truth is that it's one of the most potent marketing weapons. New consumers will always come your way regardless of how much competitors have reduced their prices. 

However, some circumstances do not allow you to reduce the prices of your products. It could be because further reduction may give the impression that the product or service has little or no value. In this case, you can resort to product packaging. It would help to package your products with complementary products to attract more customers. 

For instance, a perfume company can package a body spray with perfume oil when consumers make bulk purchases. 

Market Development Tactic

A market development tactic posits that a brand seeks to launch its products or services to serve underserved audiences or geographical locations. It could be that you are struggling to appeal to new customers in your local region. Sales and revenue might continue to drop unless a business finds novel markets for its services. 

There are numerous factors to consider when determining if your business needs to employ the market development tactic. Let’s look at them. 

  • Is there a specific target market that you have not served? 

  • Do you and your business have the financial capability to develop and key into the market development tactic?

  • Will your investment into the underserved target communities be worth it? It would be best to consider how profitable your tactic would be on both a short-term and long-term basis. 

Examples of Market Development Tactics

Here are three common market development tactics: 

  • Appealing to non-users:   It would help to target individuals that haven’t used your products earlier.  You can achieve this via numerous methods. They range from campaigns to cold outreach. 

  • Appealing to competitors’ clients: Is there any industry player producing similar products or offering similar services? Perhaps, you can provide a top-notch user experience or offer special incentives.

  • Geographic expansion: A sure-fire way to target a new audience is to leverage geographic expansion. For instance, if you focus only on the  US or Asian customers, you can find out what it takes to expand globally. 

Diversification Tactic

Diversification means introducing new products or services to uncharted markets.  Rather than expanding existing services, the company tries to promote novel products and services on an unknown platform. It is often regarded as the riskiest growth tactic, but it comes with massive gains if victorious.

Diversification has four strategies. Let’s explore them.

Vertical Diversification

Vertical diversification is commonly known as "vertical integration." It posits that a company expands its brand in either the forward or backward angle. They develop products and services that complement existing products and services. In short, vertically diversified firms enter into the suppliers’ industry. 

Let’s look at the two types of vertical diversification:

Forward Diversification: Forward diversification posits the entry of your company into distribution platforms to sustain direct contact with end-users. Rather than selling through products their retailers, these brands create their retail outlets. In any case, they can regulate the distribution channels.
Backward Diversification: Backward diversification posits the entry of a company into the manufacturing aspect to create raw materials. Rather than purchasing inputs from manufacturing firms, companies produce their inputs. If a plantain chips company owns plantain farms, they have leveraged the backward diversification strategy. By doing so, they can minimize the selling price for the benefit of consumers. It will also boost their profits and turnovers. 

Horizontal Diversification

Horizontal diversification posits that the company purchases novel products to sell them to existing clients. In any case, their current products or services may not relate to existing products and services in any way. However, the items often attract current clients.  

For instance, a brand that produces roll-on deodorants earlier may also enter the perfume market with its new product. 

Conglomerate Diversification

Conglomerate diversification posits that a company seeks to integrate unrelated services into its existing business. For instance, a brand that produces shoes may decide to enter the smartphone market with its novel product. 

 Most firms that engage in conglomerate diversification hinge on the belief that expansion into unrelated sectors has significant potentials and impacts. One of its most tremendous benefits is that the firm's profitability becomes steadier since the benefits may partially offset challenges in one sector. 

However, the probability of failure is higher in conglomerate diversification tactics. Once the plan-B market fails, it fails. Existing clients may feel that the firm has diverted from its purpose and goal, which might piss them off. 

Concentric Diversification

Unlike conglomerate diversification, concentric diversification posits that a company seeks to integrate related products and services into its existing business. The goal is to attract new clients. It is also known as concurrent integration. 

For instance, when a shoe company that primarily manufactures women's shoes starts manufacturing men's shoes, it utilizes the concentric diversification tactic. 

Conclusion

None of these growth strategies will occur in a vacuum. 

It would  be best to leverage the specific growth strategy that fits your business framework.

Pay attention to your business and what you could do better. Observation is the first big step in carving out an excellent growth strategy. 

 Author Bio

Thomas Jackson is a professional freelance content writer and an active member of several writing clubs in New York. He writes for assignment help and essay writing service reviews

He has written several songs since he was a child. He gets inspiration from the live concerts he does in front of close friends and family members.

 

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