13 Feb GROWTH STRATEGY AND STRATEGIC PLANNING
A growth strategy is a strategic plan devised to achieve aggressive growth targets for a company by expanding some combination of existing markets, products, services or infrastructure. There are typically four overarching frameworks for fueling rapid business growth – market penetration, market development, product expansion and diversification.
Market penetration aims to increase a company’s market share within existing markets by boosting sales efforts, whether that entails investing more in marketing to attract new customers, incentivizing current customers to purchase more, lowering prices temporarily to fuel demand or enhancing quality to retain loyalty. Companies with a dominant market share boast higher profit margins in the long run.
Market development targets expansion by selling current products and services into new markets which may necessitate establishing distribution channels, creating partnerships, as well as tailoring branding and messaging to resonate with untapped demographics. Tactics around expanding geographically or venturing into underserved online spaces also fits here.
Product development means introducing improved or next generation products, perhaps expanding a product line with complementary offerings that customers naturally migrate toward. This leverages existing expertise to innovate incrementally to meet demand for cutting-edge iterations catering to customer needs.
Diversification indicates more aggressive growth by taking current capabilities in an entirely new direction – like a software company acquiring a hardware company to tap global supply chains. By entering unfamiliar territory, businesses grow via diversifying revenue streams despite inherent risks.
Of course, growth strategies rely on securing sufficient capital or financing to fund expansion operationally through activities like adding staff, upgrading systems, leasing warehouse space and absorbing other scale-enabled expenses before growth yields rewards. Setting measurable key performance indicators is critical for tracking return on such investments when pursuing growth for growth’s sake will otherwise only yield growing pains as opposed to sustainable, profitable expansion.
Implementing a cohesive growth strategy allows leadership teams to make calculated decisions that boost their company’s value by reaching more customers, selling more products, entering more markets while managing risks – catalyzing an upward growth trajectory over time.