Businesses always plan to grow and expand their operations at some point. There are many growth strategies that they can use to do this. However, the method used for growth depends upon financial strength, long-term plans, technical capability, and the competition in the industry.
Some of the most common strategies used by businesses for growth include market segmentation, market penetration, product diversification and, mergers and acquisitions. More established strategies include selling more to existing customers, attracting new customers through advertising, expanding existing sales channels, creating new channels, entering new markets through exports, new products and services, introducing new automation technologies, creating partnerships with other businesses, and most importantly, networking with influential stakeholders in the industry.
Businesses can use data from market research to develop effective segmentation strategies to accurately identify, and target the right customers. Markets can be usually segmented by demographics and psychographics.
Demographic segmentation allows businesses to identify potential customers based on their demographics such as their age bracket, income level, gender, education level, and occupation. Classifying the market through a segmentation strategy enables businesses to pinpoint its target market, and generate revenue in that specific market. For instance, businesses involved in manufacturing energy drinks specifically target the younger population to appeal to their lifestyle and generate sales effectively.
Market penetration strategies revolve around selling existing products and services into the current market through existing distribution channels in a bid to penetrate the market and increase market share. These strategies can involve getting new customers and encouraging existing customers to buy more products. Attracting new customers can be achieved through creative marketing campaigns, competitive pricing strategies, offering discounts, and creating better packaging.
Introducing new and innovative products is a great way that businesses can expand. A new product sometimes allows a business to re-brand itself and become the leader in a new market or a new type of product. This is why many organizations focus on their NPD (New Product Development) initiatives so that they can come up with products which can keep the competition at bay and become the game changers in their specific industry. This is especially true for businesses in the world of technology where rapid changes are constantly taking place.
For example, businesses which run online and drive their growth through the use of the internet, can use tools such as Live Chat to allow customers to interact with the company in real time, and upsell their existing products and services.
Acquisitions & Mergers
A number of companies exponentially expand their operations, products, services, and profitability by either acquiring other companies in the same industry, or by merging with another.
Mergers and acquisitions allow companies to rapidly increase their assets, manpower, as well as their operational, and technical abilities in a short period of time. The strategy to merge with or acquire another business can help businesses increase their share in the market, engage stakeholders, and generate higher percentages of profits. Mergers can also help the merging business to enter into a new market with high barriers to entry.