Growth is no longer an aim for businesses but is now a crucial necessity according to market research. To achieve business growth, an effective business growth strategy is vital. But what is a business growth strategy and which types of business growth strategies are the most effective? Keep reading to learn more.
What is a Business Growth Strategy?
A business growth strategy is a plan to help a business expand and develop. It can involve specific projects, new products or services, mergers and acquisitions, partnerships, diversification into new markets, promotion of the product line or service – or some combination of these methods. You can develop a business growth strategy using market research, or use a tried and tested business growth strategy for maximum impact.
There are three levels of business strategy, according to industry experts. A great business growth strategy will impact every level of business, so it’s important to understand each level and the role it plays in implementing a great business growth strategy. The three levels of business strategy are:
- The Corporate Level defines the organisation’s main purpose and will therefore direct all other downstream decision-making.
- The Business Unit Level defines the specific tactics and strategies needed for each market the organisation is involved in.
- The Functional Level defines the day-to-day company actions required to meet corporate targets and align with business-unit strategies.
Related Reading: What are the Levels of Business Strategy?
What are the Benefits of an Effective Business Growth Strategy?
There are many benefits to having an effective business growth strategy. A company can be affected in a variety of ways by their growth strategies, including the development of new skills and capabilities, increased revenue, market presence, and other factors.
There are both internal and external factors that impact the success or failure of a business’s growth strategies. Internal factors include things like having enough capital, effective management capabilities, and the capacity to quickly adapt. External factors include market demand, competition in the industry, government regulation, and other variables that can determine whether or not a company thrives or fails.
7 Types of Business Growth Strategies
1. Market Penetration Strategy
One of the most common types of business growth strategies is market penetration. Market penetration occurs when a company increases its presence in an already existing market. There are two types of market penetration strategies: horizontal and vertical. Horizontal market penetration means that a company will do things such as spread their brand name to other products, increase advertising, or create a better product. Vertical penetration means a company will do things such as increase production, lower prices, or create new products. Examples of companies that have implemented market penetration strategies are Apple, McDonald’s, and Kellogg’s.
2. Market Development Strategy
A market development strategy is a business growth strategy that focuses on developing new markets to ensure that there are continuous opportunities for growth. This can be done by researching potential customers, developing brand awareness and understanding the value of your product or service, building relationships with trade partners, determining customer needs, and developing a strategic plan.
3. Product Development Strategy
This is one of the most effective ways to increase sales and grow your business. By adding and developing new products, you can attract customers who may not know about you yet. Introducing new products or diversifying your product line will help extend the length of time you can stay competitive in your industry. Product differentiation or development is an effective method of market penetration because it allows a company to distinguish itself from other companies in the same industry.
4. Diversification Strategy
Diversification can be another great way to increase sales by expanding your customer base. This strategy includes entering new markets or introducing products in related but new areas of business so you can attract customers who may not necessarily be familiar with your business. Diversification can be very effective for businesses that anticipate a slowdown or downturn in their primary market.
5. Business Partnership Strategy
A partnership is the joining of two or more businesses for a specific purpose or project. Partnerships allow you to complete work that would otherwise be too expensive or take too long to do alone, allowing your business to grow in an efficient way. Sometimes partnerships are formed when one business owner believes they need additional skills to achieve their goals, and they find a business that already possesses the necessary skills to work with.
6. International Expansion Strategy
International expansion has many benefits for a business. One of the benefits is that it can help with diversifying your revenue and expand your market share and operations. If done correctly, you could be able to increase profitability while at the same time reducing risk.
Another benefit is expanding your alternative assets/funding opportunities so if one way of funding were to dry up, you have another way of getting the funds needed for your business. You can also expand and develop your company culture while going abroad so it will be more inclusive and embrace diversity. It also allows you to embrace international financial incentives to start a business there. For example, in recent years India slashed its corporation tax from 30% to 22%. As one of the fastest-growing tech markets in the world, this could be extremely useful for businesses to utilise.
7. Alternative Channels Strategy
Alternative channels are a great business growth strategy because they diversify the customer base, giving you more opportunities to grow your consumer network. As well as this, there is less competition for these customers, which means that it is easier for you to stand out from the crowd and really capture their attention.
For example: having an online store and a physical store-front would be considered an alternative channel. Much online business is currently going through the rise of being able to have both, so you could achieve this and still have a steady customer base from your traditional brick-and-mortar stores.
Looking For Expert Business Growth Strategies?
At Growth Idea, we live and breathe business growth. With the help of our industry-leading HPeX Business Growth programme, our clients have been able to increase their growth an average of 168% in 18 months. With our expert growth consultancy services, you can find an industry expert to inform and advise you on how to achieve your goals and implement these key strategies. You can read more business growth tips and insights on our blog today or contact us to find out more about our wide range of services and how they can help you!
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