Table of Contents Hide
- What is a growth strategy?
- Examples of Growth Strategies
- What Framework do you need to build a growth strategy for any business?
Your company’s future depends on its ability to expand/grow. That development, however, does not occur by chance. To reach your development objectives, you’ll need a game plan. This is where having a growth strategy comes in handy. This post will cover growth strategies for any business, as well as examples and frameworks.
What is a growth strategy?
A growth strategy is a combination of algorithms or plans that work together to increase a company’s market share. Basically, if your company wants to grow, market growth strategies help to map out your expansion plan, taking into account your business, target market, and financial resources.
Most companies, however use the Ansoff Matrix to outline four high-level company growth strategies.
The four stages of business development, diversification, market penetration, and product development are depicted in the Ansoff Matrix for developing a growth strategy.
The Ansoff Matrix is a structure that outlines four growth strategies.
A market penetration strategy in the Ansoff Matrix entails growing your market share in an existing market. Lowering rates or using tactics like direct marketing to raise consumer awareness of your offerings are two common methods.
Entering a new market with already existing products is the aim of the market development strategy. A new market could mean new geography (for example, international expansion), a new consumer segment, or a new channel to reach consumers (for example, adding an online store to complement your brick-and-mortar location).
Developing new products for established customers is part of the product development strategy. This can be as basic as an ice cream shop adding a new flavor, or it can be as complicated as creating an entirely new product line, such as an ice cream shop that starts selling sandwiches.
Diversification development strategies are most likely to fail. The company will be labeled a trailblazer in its quest to develop new products for new markets. As a consequence, it’s difficult to figure out how to excel, even if the rewards are greater threading this path. A pretty perfect example was Apple convincing us that we needed a tablet, an entirely new product category, to complement our laptops and smartphones. A very risky move even though it paid off eventually.
But, either way, since the aim is to expand the whole enterprise, regardless of which growth strategy you use, you’ll almost certainly employ certain business development principles.
Examples of Growth Strategies
Let’s look at some real-world examples and see how various growth strategies function. However, note that these examples are here to give you a basis for a growth strategy framework. You would need to carry out tons of experiments to find out which works best.
Amazon’s shopping hegemony dates back to 1995. Consumers were not used to making purchases online at the time. Despite this, Amazon’s annual revenues have grown to billions of dollars.
What factors aided Amazon’s expansion?
A diversification growth strategy was the solution.
Amazon was one of the first online stores, allowing customers to shop online (a novel idea at the time) in a brand-new market: the internet.
The following was Amazon’s growth plan.
- Provide a better consumer experience: It began by offering a greater range of books than was available in traditional bookstores. Amazon didn’t have to worry about shelf space because it was online. Customers could also search the platform to see if a book was in stock right away. It was also able to outperform larger brick-and-mortar bookstores due to its convenience.
- Repeat: Amazon then took its successful book-selling model and applied it to other markets, such as DVD and electronics sales. Its services have continued to expand, and it now includes groceries and even healthcare.
Facebook is now ubiquitous, but it was just one of the social media networks when it first launched in 2004. At the time, MySpace was the most popular social media platform.
So, how did Facebook become so formidable?
The firm employed a business penetration expansion strategy.
It began by concentrating on a small number of target customers, then gradually grew. Here’s how Facebook went about doing it.
- Start small: Mark Zuckerberg founded Facebook in his Harvard dorm room. As a result, the first customers were Harvard students.
- Gradually expand: After gaining momentum at Harvard, Facebook gradually spread to other universities. This helped the business to develop by following Harvard’s success model.
- Increase Growth at your convenience: After spreading to universities, Facebook opened up to non-students. Because of its gradual growth, Facebook was able to concentrate on tailoring the product to the needs of each new consumer group. As a result, it was spared the growth problems that caused MySpace’s demise.
#3. Dollar Shave Club
According to Entrepreneur magazine, when Dollar Shave Club launched its razor company in 2012, Gillette had a controlling share of about 70% of the US market.
According to a CNBC survey, Gillette’s market share had dwindled to about 53% in 2019. Meanwhile, Unilever purchased Dollar Shave Club for $1 billion due to its rapid growth.
How did Dollar Shave Club defeat a much bigger rival?It used the market development expansion approach.
Dollar Shave Club’s popularity stemmed from its ability to provide a lower-cost alternative to the industry leader by selling directly to consumers, which was a new market for razors at the time.
- Identify a new market: Gilette’s goods were sold in retail stores. Dollar Shave Club used the internet to run a direct-to-consumer service, selling razors for as little as a dollar.
- Improve the consumer experience: Dollar Shave Club collaborated with Asian manufacturers to produce razors, removing the need for a middleman. Consumers who flocked to its low-cost service may profit from these cost savings.
While Google is best known for its search engine, it is the search engine’s massive revenue that has propelled it to the status of Alphabet. What was Google’s secret?
It employed the use of product development growth strategy.
Google began as a B2C (business-to-consumer) corporation that provided a search engine. It did, however, need a source of income. To generate the money, it created AdWords, a new product aimed at companies that had to pay for advertising.
- Customize the product for the customer: Transitioning from a B2C to a B2B product necessitated a new collection of capabilities tailored to the B2B audience.
- The new product should work in tandem with existing products: Google made sure that its new AdWords product integrated smoothly with its B2C product. It needed to keep its search engine fast, so it offered text ads that loaded quickly and looked like the rest of the results. This ensured that ads did not degrade the user experience. This meant that users could continue to use the search engine.
What Framework do you need to build a growth strategy for any business?
Now that we’ve looked at how others have grown, we’ll turn our attention to you. What should be the first step or the framework you would need to develop your own growth strategy?
#1. Define the objectives
The majority of business leaders consider sales growth. But how do you boost revenue? Are you adding to your client base? Are you introducing new products? Or Increasing the price of existing products?
Consider what priorities are appropriate for your company and where you are in the business life cycle. Customer acquisition could be a major priority of your growth strategy if you’re a startup. If you want to enter the B2B industry, you’ll need to think about things like what it costs to sell to companies and market directly to them.
Make sure the objectives are observable when setting them. You’ll need a quantifiable deadline to know if your goal is on track. For example, by the end of the next quarter, you could set a target of acquiring 1,000 new customers.
#2. Keep deadlines to a minimum
Your target should be attainable within the next quarter or month when you set it. Why is it so short?
You will complete the planning phase more efficiently with shorter timelines. You don’t have to spend time trying to find out where you’ll be a year from now because you’re working on short-term, realistic targets, and you can keep refining the strategy for future time frames.
#3. Conduct market study
To confirm the framework you’re considering for your growth plan, you’ll need to conduct an analysis. You’ll be flying blind if you don’t. What is the future of the industry? What is the business environment like? Exactly what are your customers up to these days?
You’ll be able to better identify risks and gather data that can be used to guide the next move if you conduct research.
#4. Make a model for forecasting
A model predicts the growth trajectory you’re aiming at in developing your growth strategy framework. This may seem to be pointless work, but it serves two critical purposes.
For starters, it keeps track of your progress toward your objectives. Are you achieving the goals you set for yourself in terms of growth? This is what the model should demonstrate.
Secondly, the model is used as a guide for getting buy-in to the strategy. This means that I f you rely on a sales team to bring in clients, for example, having them to commit to the targets in your growth strategy model is critical to your success. Furthermore, the feedback you’ll get will be critical in ensuring the model’s accuracy.
#5. Determine what actions should be taken
The next step is to move from high-level objectives to specific actions. This entails determining the strategies that will help you achieve your goals. For example, when introducing a new product, you may need a go-to-market strategy. Furthermore, CRM software could assist you in managing your customer relationships if customer growth is a priority.
You should also have clear next steps in order to begin implementing your growth strategy once you’ve outlined the nuts and bolts.
It’s important to develop a growth strategy, but it’s much more important to put it into action. To make sure you’re on the right track, follow the actionable steps and compare your performance to the forecasting model.
If they fall beyond or above expectations, do not be afraid to make changes. You will improve your chances of successfully growing your company if you have a well-developed growth plan in place.