The vast majority of businesses are looking to grow. According to McKinsey, 93% of companies have tried at least one growth strategy over the last three years. When you start out, growth is a matter of necessity as you build your enterprise from nothing, then later on further expansion allows you to make a good salary and live comfortably.
Of course, committing to growth is easier said than done. So how do you go about expanding a business? Here are five growth strategies to be aware of.
1. Market penetration
Market penetration involves selling more of the same products to the same audience, in other words, convincing customers to buy your products over other brands, which can increase your market share.
This can be the quickest and cheapest option. You already know your audience and your product, so don’t worry too much about research. Instead, focus your attention on marketing. A market penetration strategy can also reduce overall production costs. As sales volumes grow you’ll be able to manufacture in bulk. However, this isn’t necessarily the best strategy.
2. Market development
This strategy involves taking existing products and marketing them to a new audience. This isn’t always as straightforward as it seems. As many experts will say, testing is essential, and you need to know who your new audience is. It’s not enough to simply say ‘millennials’; you need much more detail.
Once you know your audience, you need to market directly to them. Dale Broadhead, founder of PPC agency Conversion Hut, recommends display campaigns in Google Ads, because you can expand your reach and target specific groups of people who’ve never heard of you before. He added:
This works because you are making decisions that are backed by data.
3. Product development
Rather than marketing to a new audience, you could develop a new product for an existing market. According to Manish Choudhary, global head of software group at Diebold Nixdorf, new agile strategies have made this a quicker and more effective process than ever before. By knowing more about your audience, you can spot opportunities for new products and take advantage swiftly.
If you’ve been able to foster brand loyalty, you may be able to leverage this when launching new products. However, it’s estimated that around 95% of all new products fail every year, so the odds are against you unless you commit to understanding what your audience needs.
Diversification is the process of launching a new product in a new market. This type of strategy arguably carries more risk. Not only do you have the challenges of developing a new product, but you’re also dealing with an unfamiliar audience. Many experts will recommend you only use this option if there are no more opportunities for growth with your current product or market.
However, others point out that if utilized successfully, diversification can help secure your business. You’re no longer depending on a single product sold to a single audience, so you’ll be better able to weather changes in the market.
5. Alternative channels
One of the most low-risk options is to utilize alternative marketing channels. Rather than committing to new audiences or products, this growth strategy involves trying out different marketing methods to see if you can attract audiences you might not have even realized were out there.
Just using more than one channel can give your business a huge boost. One survey found that using three or more channels led to a 287% higher purchase rate than sticking with a single marketing method. The low-risk nature means if one channel isn’t working out, you can always abandon it and try a new one without having invested too much.