A company can increase its growth rate by taking goods or services developed
Do you want to grow your company? Due to personal ambition, because an opportunity has presented itself, or simply to increase your turnover? Whatever your motivation, there are various ways to grow a company. Show The Ansoff modelThese ways are clearly presented in the Ansoff model, a strategic tool used during the development of a growth strategy. It is a good basis for considering the strategic development of your company. The Ansoff growth matrix is comprised of two axes
The four growth strategiesFour types of growth strategies are proposed on this basis. The four main growth strategies are as follows:
ConclusionBased on the strategies used and its ambitions, a company can choose one of these four strategies. This choice especially depends on the approach of a company's product/market and the latter's taste for risk. Planning and implementing a growth strategy to develop new markets and expand your business before your current market flattens out will not only help your business survive tough times, it could also give you a considerable edge_ WHAT TO EXPECTYour business market, like everything else, will change with time. As your business matures and your market share steadily increases, you will probably begin to encounter the growth limits of your original target market. Planning and implementing a growth strategy to develop new markets and expand your business before your current market flattens will not only help your business survive through tough times, it could also give you considerable edge on the competition. This Business Builder will take you through the process of new market development. It will provide you with some easy-to-follow steps on planning and implementing a market expansion strategy before your current market flattens or declines. WHAT YOU SHOULD KNOW BEFORE GETTING STARTED [top] The decision to develop a new product can mark the beginning of an extremely difficult process for many businesses. Because every business differs in regard to products or services it offers, the information in this Business Builder is designed to be as broad-reaching as possible so that it may be adapted to a variety of situations. Applying the information in this Business Builder to your business will help you become more adept at expanding your business into new markets. This Business Builder was developed to help you expand the market for your established products or services. Another method of market expansion involves developing new products that you will introduce to the same or new markets. The Business Builder "How to Expand Your Business Through New Product Development" provides information on how to grow your business by developing new products. Following are a few things to keep in mind before you get started:
A systematic approach is the best way to find a new market. Without it, you can waste a lot of precious resources — something a small business does not have an excess of. The following steps will effectively and efficiently guide you through the new market development process:
HOW YOU SHOULD DO IT [top] In the business world, change may be inevitable, but growth is not. Business growth always depends on the strategies and the actions that you take to make it happen. The degree to which you implement a market growth strategy depends on your own business goals and objectives. You may plan to grow your business slowly so that you can maintain a small but manageable market share. Or, you may develop an aggressive growth strategy that causes you to establish a more flexible organizational structure that can adapt to new markets and rapid growth. Regardless of the degree of market growth required to meet your particular business goals and objectives, the need for growth and a plan to accomplish it is fundamental to a successful business venture. Without it, you will leave your business vulnerable to market pressures such as increased competition or regional economic downswings. Planning and achieving market growth, whether aggressive or conservative, requires the application of some fundamental marketing activities and techniques. These activities and techniques are incorporated in the following four steps needed to expand your business through new market development:
Since your products, services and customers are unique, you will need to adapt these steps to your own needs when you apply them to your market expansion efforts. Step 1: Define Your New Target Market(s) The first thing you will need to do as you begin your market expansion effort is to determine the demographics and the geographic location of the new target market. Determine which of the following categories characterizes your expansion efforts:
If you plan to sell to the same target group, then you should already have a detailed profile of the customers in that group. If you are targeting a new group, you will need to develop a basic profile of the new customers. The more you know about your target customers, the easier it is to develop a marketing strategy that will reach them. For more information on target markets and a customer profile, please refer to the Business Builder How to Identify a Target Market and Prepare a Customer Profile. WHO IS YOUR CUSTOMER? Individual CustomersAge: Gender: Marital Status: Parental Status: Financial Profile: Income: Investments: Debts: Profession: Business Customers Type of Business: # Of Years in Business: # Of Employees: Annual Revenue: Products or Services: Organizational Structure: WHAT ARE YOUR CUSTOMER’S NEEDS? Individual CustomersBuying Habits: Interests: What is Important to Him/Her: Lifestyle: Other Needs: Business Customers Special Needs: Purchase Decision-Makers: Other Needs: HOW CAN YOU MEET THOSE NEEDS? Reasons the new customer will buy your product: How your product differs from your competitor’s: After you have defined your target customers and described how you can meet their needs, then you need to define the approximate geographic boundaries of your new target market. Select an area where you feel the target customer population is large enough to support your market expansion efforts. For Example: The owner of the Pedal Power bicycle shop decided to expand its market by developing a mail order catalog for his products. The following is a portion of his customer profile AGE: 25 to 60 years old GENDER: Men MARITAL STATUS: Single or Divorced Parental Status: No Children or Grown Children Financial Profile: After you perform the market research activities described in the next step, you may find that you will need to modify your target area boundaries, or find a new target area. That’s OK. Identifying the boundaries at this stage will give you some ideas of where to focus your research activities. Now take some time and complete the worksheet for your new target market. Step 2: Do Your Market Research Once you have developed a customer profile and identified the extent of your new target market, then you can do some basic market research to determine the following information: Interest in your product or service Your market research is a very important piece of the market expansion process. The more you know about your potential customer base and your competition, the easier it will be for you to identify your niche in this new market. Your data may even help you to decide whether or not you should focus on this potential market.Where to get the Information Your local college and public libraries are excellent resources for national and regional demographic and business-directory information. Here are some helpful resources that you may want to consult:
• Your library is likely to have other resources that can be used to profile the local competitors and potential business customers. Ask the librarian about state and city manufacturer and service directories, the various directories produced by Dun & Bradstreet, Ward’s Business Directory of U.S. Private and Public Companies (Gale Research, annual), and theThomas Register (Thomas Publishing, annual). • For local information, contact the chamber of commerce. The staff should be able to provide you with information on regional growth trends and competitors. • Local newspapers will provide you with information on competitors, the local economy, growth areas, business stability, etc. • Read the yellow pages for the targeted area to help you determine how many competitors are in the area. • Take a sales representative or wholesaler to lunch. These people make it their business to know what’s going on in their industry and community. • Observe your competition in person. Pretend you’re a customer and shop in their store or analyze their products or services to determine what is good or bad about their operation. • Contact your prospective customers directly. Through personal or telephone interviews, surveys, or focus groups you’ll be able to gather valuable information on your target market. Now list the sources you are going to use to get the market research information that you need. Key Questions to Answer Your research should help you decide whether or not it will be profitable for you to enter into the new target market. Refer to your customer profile as you do your analysis to help you stay focused on your customers and their needs. If you need help in conducting a market analysis, refer to the Business BuilderHow to Prepare a Market Analysis.Generally, the results of your analysis should help you to answer these basic questions:
After you have completed your market research, analyze the information you have gathered to determine whether market expansion into this particular market is the right decision. The owner of Pedal Power bicycle shop decided to target a tri-state area. This area contained several large cities. Since readily available demographic information about bicyclists is limited, the owner decided to purchase a mailing list for the targeted area from a marketing research firm. The mailing list consisted of people who subscribe to magazines that deal with bicycling, running or other outdoor activities. The market research company was also able to provide the owner with information on growth trends for bicyclists in the target area. The information indicated that the increasing popularity of bicycling was resulting in a steady growth in bicycle-related sales. The number of bicyclists in the target area was also growing at a healthy rate. To determine the number of competitors in the target area, the owner contacted the chambers of commerce for each of the major cities. He discovered that there were 17 bicycle shops in the tri-state area. None of these shops offered a mail-order service. Step 3: Decide to Enter this Market or Look for Another Target Market After you complete your analysis, you should have a good sense of the growth potential for your products or services and whether it is a sound financial decision. Your market analysis will help you make a "go/no go" decision, but don’t be afraid to rely on your instincts. You may see something about the market that isn’t easily identified with research data. Remember that the market analysis can only help you make a well-informed decision. There is always some degree of risk in any business decision you make. Taking well informed risks is an essential part of being a successful business owner. Don’t be discouraged if you decide not to enter this market. Look for another one. There are plenty of opportunities out there. You will eventually find the market with the right growth potential for your products or services. Step 4: Enter the Target Market After you have made the decision to enter a new market, your next step is to develop and implement a good strategic plan for promoting and delivering your products or services to that market. This plan should focus on three key areas:
NEXT STEPS [top] Finally, measure your success by applying standard business measures to your expansion venture. You should be tracking your sales, market share, profit and loss, and all other key measures that apply to your business. Use this information along with customer and employee feedback to design and implement better ways of doing business. Learn from your expansion efforts so that as you continue to grow your business by establishing new markets, you can translate what you have learned into good business decisions. As mentioned earlier in this Business Builder, markets constantly change. If you are aware of this, and you structure your business to be dynamic, adaptable, and growth-oriented, then you will be successful. ASSESSMENTS [top] When you have completed this Business Builder, you should have a general understanding of the following key elements:
RESOURCES [top] Books Strategic Market Management, 7th edition, by David A. Aaker. (Wiley, 2004). See especially Chapter 12, “Growth Strategies.” Market-Based Management, 3rd edition, by Roger J. Best. (Prentice Hall, 2002). Internet Sites Sample Marketing Plan: AMT. MoreBusiness.com. "Research: Worth the Investment," by Del Williams. Promo 6:11 (October, 2003). "Grandma Got Run Over by Bad Research," by Phaedra Hise. Inc. 20:1 (January 1998), 27. "Competing on a National Scale," by Janice Bryant-Howroyd. Entrepreneur.com, 2002. "Know Your Competition," by Carolyn Z. Lawrence. Business Start-Ups(April 1997). Entrepreneur.com. “Mapping the Growth of Older America: Seniors and Boomers in the Early 21st Century,” by William H. Frey. The Brookings Institution, Living Cities Census Series. May 2007. About the writer — Glen Greene is a freelance writer based in Wilmington, Delaware. He has over ten years experience developing a variety of publications for large and small businesses. His list of clients includes DuPont, Hewlett-Packard, and ICI. All rights reserved. The text of this publication, or any part thereof, may not be reproduced in any manner whatsoever without written permission from the publisher. How can a company improve its growth?Although growing your small business will take time and energy, there are 10 strategies you can use to help accelerate business growth.. Do Your Research. ... . Build a Sales Funnel. ... . Increase Customer Retention. ... . Participate in Networking Events. ... . Practice Corporate Social Responsibility. ... . Form Strategic Partnerships.. What are the 4 growth strategies?The four growth strategies
These are Product, Placement, Promotion and Price. Where the Four Ps focus on audiences, channels & pricing, the Ansoff Matrix is more effective for a broader view of markets and uses the older Four P framework within each of the 4 Ansoff quadrants.
What growth options will you use to develop the business unit?The four main growth strategies are as follows:. Market penetration. The aim of this strategy is to increase sales of existing products or services on existing markets, and thus to increase your market share. ... . Market development. ... . Product development. ... . Diversification.. How does product development achieve company growth?A product development strategy provides a framework for creating new products or improving the performance, cost or quality of existing products. The strategy helps a company achieve business goals, such as entering new markets, selling more to existing customers or winning business from competitors.
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