Growth is something that all businesses and companies want. When we say growth strategy, it isn’t just a plug that gives you immediate results. It’s a process of creating a team and organizing mindset. Ryan Holiday says about growth more of a mindset than a toolkit.
Today, we’ll study growth strategies, definitions, types, and examples.
What is Growth Strategy?
A growth strategy is a set of actions and plans that make a company expand its market share than before. It’s completely opposite to the notion that growth doesn’t focus on short-term earnings; its focus is on long-term goals.
A successful growth strategy is an integration of product management, design, leadership, marketing, and engineering. It’s important to remember that your growth strategy would only work if you implement it into your entire organization.
The growth strategy is not a magic button. If you want to increase the growth, productivity, activation rate, or customer base, then you have to develop a strategy relevant to your product, customer market, any problem that you’re dealing with.
Types of Growth Strategies with Examples
Some of the main types of growth strategies are as follows;
Market Penetration Strategy
Market penetration is about developing uniqueness about your product or service that you’re offering through price differentiation. Either you offer products at cheaper prices to capture the market share, or you charge higher prices to grab a completely different segment of the market.
You could also differentiate your brand by promoting and making your product more attractive. Here you only change the marketing and advertisement strategy, so that your target customer would perceive your products from a different perspective. It would lead to an increase in market share.
For example, IKEA followed the market penetration in the beginning by offering its products at lower prices. The company uses the cheaper raw material, merging warehouses, and taking away storage and assembly lines. It helped the company to become the world’s leading retailer that offers economical furniture.
The market expansion allows you to grab the market share of a completely new and different market. Here you target the unserved or underserved customers. It means expanding your market and reaching a global audience. It would include the customers of the new demographic that you haven’t served before.
For example, a watch is your product and you’re selling it in the US. You could go global and offer the same watches in Asia and Europe. It would help you to become a global play and expand your market share and customer base.
Product Development Strategy
Product development strategy means improving your product/service in order to meet the expectations of customers. If customers are happy with your product, then they’ll keep using it and share their experience with their social circle. It would create a repetitive loop of sale, and you’ll keep getting new customers through referrals.
For instance, smartphone companies like Apple iPhone follow product development strategies. They introduce a new model of the iPhone series with a new design, feature, and more powerful than the previous model. Just like they launched HomePod with smart speakers voice-enabled last year, and it was a completely new product
Product development strategy helps you to attract new customers, increasing sales, and expand your market share.
Diversification strategy means introducing a new product/service in an unexplored market. It’s a highly risky strategy because it involves the marketing of the new product/service in a completely new market. There are different types of diversification;
- Horizontal Diversification
- Vertical Diversification
- Concentric Diversification
- Conglomerate Diversification
Collaboration & Partnership
Some businesses are competing with each other in the same market and targeting the same audience, but they offer different solutions to the customers’ problems. Here you collaborate and develop a partnership with them in order to expand your market share.
For example, a retailer deals with foreign exchange current notes, and you offer luggage traveler bags to the customers. Both businesses complement each other. If bag seller and current exchange retailer make a deal to refer customers for a commission. It would be a win-win situation for both of them.
Growth Strategies Examples
Facebook is the world’s leading social media platform today. But back in 2004, it was one of many social media platforms. My Space was among the most powerful back then, so how Facebook made its growth. The company launched the market penetration strategy and targeted a very narrow customer base, and gradually expanded its market. Here’s how
- Started Small. Mark Zuckerberg started Facebook along with his roommates in Harvard, and Harvard’s students were his target audience initially.
- Gradual Expansion. Once Facebook received success in Harvard, it started attracting the attention of students in the other colleges. The platform followed the same business model that succeeded in Harvard.
- Grow & When Ready. After Facebook has spread among the students across different colleges, the platform opened its doors for non-students. It allowed the platform to target different type’s customer segments in the market.
Amazon launched its online sale back in 1995, and people weren’t accustomed to online shopping back then. Despite all the challenges, Amazon grew into a billion-dollar brand. Amazon was among the earliest retailers that offered online shopping, and the platform adopted the growth strategy by taking the following steps;
- Better Customer Experience. Amazon started offering a large variety of books that weren’t available in the store. Since the platform was online, so it didn’t have the issue of shelf spacing. The customer could check the stock of the books at any time. The convenience attracted a lot of new customers to the platform.
- Rinse & Repeat. Amazon expanded its portfolio in similar categories like electronic and DVDs by following the same business model. The platform kept on growing and expanding its portfolio.
How to Develop Your Growth Strategy
Go for a Growth Strategy Template
You shouldn’t launch a strategy without planning and knowing the steps of your growth strategy. Download the free templates and start working on the internal growth of your business.
Choose Your Growth Area
Everyone wants growth. Now the question is what would you like to grow? You like growth in terms of customers’ base, revenue or profit, new location, new product, new market, new branch, expansion of current office, or the employees’ headcount.
It’s highly probable that you’d like growth in multiple areas. For instance, increasing sales would result in revenue growth; it would lead to the expansion of offices and more customers. The best growth strategies don’t start out of anything.
Know Your Competitors
Once you know the growth area, the next thing you should do is to justify your growth. Therefore, you have to conduct market research and analysis to find out the feasibility of your growth.
Plan Your Action
Now should set goals that how much you want the growth after determining what and why you the growth. The goal would help you to know the endgame of your organization that where you want to be. Therefore, your goals should be realistic, achievable, and relevant to the industry research.
Execute Your Plan
Plan execution means how you’re going to achieve your goals and reach your destination. It would be useful if you write down a detailed strategic plan to have a better understanding. It would comprise of a list of resources you need, responsible personals for different tasks, deadlines, and other items.