Anybody who has done some type of marketing in the past can tell you that growing a business is not easy.
In fact, it is one of the harder things you’ll probably do in your career.
But what happens when you want to achieve growth, yet you’re frustrated with the fact that you can’t seem to make it happen?
In those cases, it is wise to look to growth strategies that many, many companies have turned to over the course of time.
In this guide, we’ll discuss what growth strategies in business are, they types available, and how you can use them to help scale your business.
What is a Growth Strategy in Business?
According to Gartner.com, a growth strategy in business is “an organization’s plan for overcoming current and future challenges to realize its goals for expansion.
Examples of growth strategy goals include increasing market share and revenue, acquiring assets, and improving the organization’s products or services.”
In other words, growth strategies are frameworks that allow a business to grow.
When deployed properly, businesses oftentimes see growth that leads to additional customers and revenue.
What Should a Growth Strategy Consist Of?
A growth strategy should include all of the strategic components and assets that will be required for growth.
To be clear, a growth strategy is NOT a marketing program or plan, and also not a tactical execution roadmap.
It is a high-level strategy that drives a series of macro decisions, but at a high level.
How Do Growth Strategies Work?
Growth strategies work by aligning a marketing team with long-term goals, then forming an action plan on how to achieve those goals.
A growth strategy requires that all departments within an organization involved, are focused on growing the company from many different angles, and fully encompasses a marketing strategy.
Growth strategies have consistently proven to work, as companies such as Dropbox, Facebook, and many other household names have achieved huge success by deploying them.
We’ll discuss more on that later.
Importance of Growth Strategy
As we briefly touched on above, growth strategies are important because they allow an organization to focus on what they want to achieve, and then define everything needed to achieve those goals.
Nearly 20% of new businesses close their doors before even reaching two years in operation, according to the Bureau of Labor Statistics.
Even worse, for those that do make it further than the two year mark, only 45% will reach 5 years in operation.
It’s clear that growth is essential to make it in business and not become yet another statistic.
When used correctly, a disciplined business deploying any of the different growth strategies will likely see sustained growth that would not be possible without this strategic avenue.
What are the 4 Growth Strategy Types?
Before rushing out to implement a growth strategy, it is important to understand the different types.
Once understood, you can select the one that is best for your organization that will unlock the best results.
1. Product Development
A product development growth strategy involves developing products that meet or exceed customer expectations.
Oftentimes, these products meet an unaddressed need that customers do or do not know they have.
2. Market Penetration
Market penetration is the growth strategy by which a business will attempt to take away market share from other players in the market.
This oftentimes results in competing over price, or positioning your brand or service offering in a way that is much more favorable than the competition.
3. Market Development
A market development strategy is a growth strategy that a business uses to introduce their product or service offering to an audience that they have not yet reached.
Like it sounds, the organization is developing a market in which to sell their product or service offering.
4. Acquisition, Merger, Partnership Growth Strategy
This type of growth strategy involves merging or partnering with other businesses in an attempt to rapidly consume additional market share.
Unlike an organic growth strategy, this type often involves accelerated timelines and rapid deployment of resources and capital to quickly build up a business or business unit.
Who Can Benefit?
No matter what level of business at which an organization operates, some type of growth strategy can take business to the next level.
Startups are the most likely candidates to deploy a growth strategy, especially if they are backed by venture capital or investors who don’t care to wait a long time to recoup their investments.
You will oftentimes see startups using product development growth strategies, as they are usually on the cutting-edge of product offerings with innovative products, yet scrappy teams who are looking to change the world.
Small businesses are more often than not shining examples of organic growth in action.
Because they are not a startup, they have established processes and teams in place that have allowed them to stay in business past the dreaded 2 year failure mark that we mentioned above.
However, since they don’t have the deep pockets like a corporation, they need to be wise with how they spend money.
Therefore, you’ll most likely see small businesses using a market penetration strategy, and competing on price or quality with high amounts of repeat business or customers.
No matter how large a corporation becomes, there is always room for growth.
Corporations typically use a mergers & acquisitions model, as they have a lot of cash and internal resources that can easily absorb extra teams or business units.
However, due to their large internal resources and talent pools, they might also employ any of the other growth strategies.
Growth Strategy Examples
Growth strategies work, but don’t just take our word for it.
History is filled with countless organizations that have scaled and achieved success because of proven growth strategies.
Let’s take a look at some of our favorites.
Example of Product Development
When discussing a product development growth strategy, there are few companies that surpass the success that Apple achieved when developing new products.
How a Product Development Growth Strategy was Used
For decades, Apple has cemented itself as a unique innovator that consistently produces state of the art products that customers love.
- They developed the iPod, which revolutionized the music industry.
- They developed the iPhone, with revolutionized smartphone industry.
- They developed the iPad, which revolutionized the personal tablet industry.
And that is to just name a few.
But as you can see, Apple has a consistent track record of unlocking success by delivering new products to their customers.
The results speak for themselves – Apple is one of the most coveted brands on this planet, and as a result, is one of the most valuable companies in history.
Not only is Apple worth hundreds of billions of dollars, but they have a cult following globally.
Customers love their products and will continue to purchase them well into the future.
Example of Market Penetration
Uber is a great example of a company that understood the market penetration growth strategy well, and facilitated growth using nearly all elements of this type of strategy.
How a Market Penetration Growth Strategy was Used
Uber developed a referral program for riders that allowed them to aggressively expand, despite operating in a competitive market filled with competition.
Existing Uber riders could refer their friends to the platform, offering those interested parties free Uber credit for signing up as a new rider.
Once that rider took a ride, the referring rider earned cash and free credit.
The same was true of drivers.
When existing drivers referred new drivers to the platform, the new driver would get a huge cash bonus, sometimes worth up to $2,500.
In return, the referring driver would also get that same level of cash bonus.
This type of referral program allowed Uber to tap into their existing base of riders and drivers and grow at a rate that most companies have never experienced.
Uber gained such a large amount of market share that existing taxi companies declared bankruptcy, allowing Uber to not only completely revolutionize the transportation market, but establish itself as one of the world’s premier logistics companies.
Example of Market Development
Nike is synonymous with rapid growth in what was once considered a category that was very difficult to crack.
How a Market Development Growth Strategy was Used
Nike took risks like no other clothing company before it had taken.
In Nike’s early days, the company essentially bet the farm by offering Michael Jordan a deal worth $500,000 per year, beginning in 1984.
The deal, which totaled at $7,000,000, meant that Nike put almost all of its marketing budget into that single sponsorship.
As Michael Jordan continued to dominate the basketball court, Nike continued to grow as a result of the sponsorship.
They became a household name, which led to a series of other sponsorships, and the snowball effect just kept going – innovating and taking risks.
Nike is now a household name, and is one of the largest names in sports.
They took risks early on, then kept doing so, until they built a moat around themselves that is very hard to compete against.
Example of Acquisition, Merger, Partnership Growth Strategy
Facebook, which recently changes its corporate umbrella to Meta, has achieved astronomical growth in a relatively short amount of time.
How Acquisition, Merger, and Partnership Growth Strategy was Used
Facebook has used many different growth strategies, but arguably the most important has been their acquisitions of promising tech companies such as WhatsApp and Instagram.
As those platforms gained a huge following globally, Facebook capitalized on that by purchasing those companies and using those platforms to cross promote one another.
Meta is now the largest collection of social media platforms on the planet, with more daily active users than many of the other social media platforms combined.
As a result, the company has minted countless millionaires, and a fair amount of billionaires too.
What is the Best Growth Strategy?
It is hard to say what the best growth strategy is, as every business has its own goals and objectives and because of that, each must use the growth strategy best for them.
If you’re struggling with what the best growth strategy is for your organization, let yorCMO help.
yorCMO CMOs have a deep understanding of every facet of growth strategies, and the resources to execute on that growth once defined.
Book a call today and get your growth strategy set up and in motion!