8 Growth Strategies for the Modern Business Landscape
Nov 3, 2023|Read time: 10 min.
- A growth strategy is an action plan for a business to increase sales, revenue, or customers.
- Choose business growth strategies that align with your budget, goals, timelines, competition, and desired market share.
- The most effective growth strategies align with brand positioning, possess deep audience insight, and are diversified to reduce risk and maximize market share expansion.
In a business landscape where consumer preferences and behavior are constantly changing alongside technology, the significance of a growth strategy cannot be overstated.
It’s the blueprint for success, the guiding force that propels businesses forward, and the key to thriving in a fiercely competitive market.
In this article, we’ll define what growth strategy means, discuss different types of strategies, and how to build one. We’ll also explore the transformative power an integrated approach holds in the pursuit of business excellence.
Why growth strategy matters
Put simply, a growth strategy is a well-defined plan or set of tactics for achieving expansion and increased success. It outlines how a business intends to grow in terms of revenue, market share, customer base, or geographical locations.
A well-defined plan or set of tactics for achieving expansion and increased success
Growth strategies encompass various approaches, such as market penetration, product development, market development, diversification, mergers and acquisitions, and more, depending on the specific goals and circumstances of the business. These strategies are critical for a company’s long-term viability and competitiveness.
To remain relevant and adaptive, large brands must continuously seek new avenues for growth, innovation, and market expansion. A robust growth strategy enables businesses to navigate these changes effectively.
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Types of business growth strategies
At a high level, there is organic business growth and inorganic. Organic growth means expanding naturally through internal efforts, like increasing sales, launching new products, or entering new markets, without relying on mergers or acquisitions.
It’s self-driven growth from within the company, and it’s considered more stable and sustainable than inorganic growth that happens through external means.
The four most common and well-known growth strategies align with the Ansoff-Matrix: market penetration, product development, market development, and diversification. But with the expanding digital landscape and changes in consumer behavior, brands have more opportunities to diversify their approach, grow their footprint, and get in front of customers in more impactful ways.
Here’s a closer look at 8 different types.
1. Market development (expansion)
Market development, or market expansion, is a growth strategy where you sell existing products to new, untapped markets. This strategy helps you broaden your market share beyond your current customer base.
It might involve targeting different industries, demographics, corporate departments, or geographic areas. Successful companies often find the most profitable growth by expanding into adjacent markets.
Uber’s global expansion is a prime example. They started in the United States and expanded internationally, adapting their services to local needs and regulations. This move extended their customer base and global presence, contributing to their significant growth as a transportation platform.
To succeed in a new market, it’s essential to understand the entire competitive landscape, including non-direct competitors and key decision-makers.
2. Market penetration
Market penetration, on the other hand, aims to increase a company’s market share and sales within an existing market or customer base. This strategy typically involves selling more of the company’s existing products or services to its current customers or targeting similar customers who have not yet used the company’s offerings.
Amazon’s expansion of its Amazon Prime service is one example of market penetration. Amazon already had a large customer base, but they wanted to increase customer loyalty and sales within that existing customer pool.
Amazon introduced various enhancements to its Prime service, including faster delivery options, expanded streaming content, and exclusive deals. These options aimed to attract new customers while also encouraging current Prime members to use the service more frequently.
As a result, Amazon increased its market penetration by making the Prime service more attractive to a broader range of consumers.
Interested in assessing your current market position or exploring a new one? See where you stand today.
3. Market disruption
Market disruption involves entering a well-established industry that is usually dominated by a few legacy brands and proceeding to do things completely differently than everyone else. There are many ways you can potentially disrupt a market, including:
- Using a completely different business model, as many direct-to-consumer (DTC) brands have done.
- Utilizing innovations, such as when Salesforce offered a cloud-based CRM.
- Offering significantly cheaper or better quality products.
- Providing something new, such as Slack replacing traditional email.
Think of how Dollar Shave Club disrupted the male razor market with a DTC model. In a sign of capitulation, Unilever acquired them roughly five years later for $1 billion.
4. Product expansion or diversification
Developing new products or adding new features to existing ones can be a highly effective business growth strategy. Product development opens your brand up to new audiences who weren’t interested in your brand before.
Semrush is an example of a company that started with a rudimentary SEO and paid search platform.
The company launched new features over the years, and it’s now a comprehensive software suite. Although the target audience never changed, new functionalities appealed to a wider segment of that audience.
This business growth strategy worked well for Semrush which has a current market capitalization of more than $2.7 billion.
5. Owned asset optimization
Owned asset optimization (OAO) is an emerging approach to growth strategy that aims to harmonize a company’s various brand and marketing efforts around common business goals.
In OAO, a brand’s content and other marketing materials are viewed as business assets with potentially untapped value. These assets are then optimized and strategically leveraged to build brand equity and generate consistent, predictable revenue streams.
This approach creates a synergistic relationship between branding and revenue generation, ensuring that marketing efforts not only drive engagement but also contribute directly to the bottom line.
6. New channels
New distribution channels rank among the top 10 business strategies for growth because they propel revenue growth without any product changes. Ecommerce businesses like Allbirds have increased revenue by also growing their brick-and-mortar presence. Whereas Allbirds was exclusively online in the beginning, they currently boast 29 real-world stores.
Sometimes, one company’s identification of a new distribution channel can trigger a tsunami of change throughout the industry. Take Salesforce. They introduced the idea of cloud-based, subscription software in an industry dominated by large, expensive, complex enterprise software requiring an army of professional service reps to get it to work.
Salesforce went on to grow rapidly, and today it’s a $21 billion+ entity. The software industry transformed, and today is filled with other SaaS offerings.
7. Strategic partnerships
Strategic partnerships with other brands can generate growth that otherwise wouldn’t be possible. For example, if you partner with a company that offers a product or service that complements yours, you get access to their audience, and vice-versa. You also receive referrals from your strategic partner and benefit from the goodwill built up around their brand.
An example of a strategic partnership that worked well is the one between Lyft and Taco Bell. Lyft offered Taco Bell delivery service to its customers, in which a Lyft passenger could request a mid-trip stop at a local Taco Bell (“Taco Mode”) with a simple tap within the Lyft app. The partnership led to free publicity for both companies and an increase in sales for Taco Bell.
Strategic partnerships can also focus on an improved or unique product. Once again, looking at Taco Bell, a partnership with Doritos resulted in the creation of the Doritos Locos Taco. To say it was a massive hit is an understatement. Within the first 18 months of the new product launch, Doritos Locos Taco sales surpassed $1 billion.
Acquisitions are one of the most straightforward and effective paths to business growth. They typically become a viable strategy for companies with substantial cash flow and debt capacity at their disposal.
Acquisitions offer a range of advantages. They enable businesses to:
- Reduce competition by acquiring direct competitors.
- Gain access to proprietary technology that would be time-consuming and costly to develop in-house.
- Tap into the customer base of the acquired company.
A prominent example of successful business growth through acquisitions is Salesforce. In 2020, Salesforce acquired Slack Technologies, a prominent business communication platform. This acquisition allowed Salesforce to diversify its services beyond customer relationship management (CRM) into workplace collaboration and communication.
The goal was to create an integrated platform for businesses and merge customer data with communication tools. This underscored the trend of companies broadening their service offerings through strategic acquisitions to provide more comprehensive solutions to their customers.
How to build a successful growth strategy
So, how do you execute a successful business growth strategy? A comprehensive growth strategy encompasses all aspects of your brand, including digital marketing, brand identity, positioning, and customer experience. Here are the key steps that ensure your growth strategy is set up for success.
Know your brand
First and foremost, you need a clear understanding of your brand identity and strengths. Identify your core competencies, positioning, and differentiation. Consider Walmart, for instance, which achieved remarkable growth by delivering the lowest prices for its customers.
Conduct market and audience research
No matter which growth strategies you implement, start with market research. Research gives you insight into your current customers as well as potential new business from untapped markets. This step reveals trends, growth opportunities, and potential barriers to entry that could limit your success in a new market.
Audience research helps you tap into new areas of your current market, as well as new audience segments that could benefit from your offerings. You’ll uncover valuable insights about buying behavior and product preferences in addition to the channels they use most frequently along their journey.
Competitive research highlights your positioning relative to competitors in your current market. It also identifies market share leaders in new areas so you can assess their vulnerabilities and capitalize on opportunities.
Once you have a clear understanding of your current market as well as where you want to grow (new markets or existing markets), you can then establish specific growth goals. Goals are key to any growth strategy because they drive the actions that lead to success.
All growth goals should be measurable, and quantitative goals should be time-bound with deadlines.
By establishing clear goals, you can measure your success and optimize your activities over time. You can adjust your strategy as necessary to ensure the achievement of your growth objectives.
Determine your growth strategy
After you set growth goals, decide which growth strategy you’ll implement to acquire new customers and achieve your goals.
Will you target organic growth, or use an acquisition strategy? Alternatively, you might combine several strategies to achieve your goals. It’s more complex to implement multiple business growth strategies, but it’s certainly a method to maximize your results.
The strategy or strategies you choose will depend on a variety of factors, including your budget, goals, opportunities, competition, timelines, and calculated market share targets.
Create your implementation plan
Your execution plan contains the nitty-gritty details of your growth strategy. It’s the concrete actions you’re going to take to make your growth strategy a reality. For example, if you’re going to use acquisitions as a growth strategy, define the specific gaps you’re aiming to fill or the new audience segments you’re trying to capture.
Don’t be vague with your execution plan. Spell out all the details of your growth strategy so that you and your team members know what needs to be executed, when it needs to be done, and how it will be achieved.
All of this planning creates accountability and helps ensure that you hit your intended growth goals more reliably.
Measure results and optimize for what works
Once you have established your growth strategy and have started executing it, regularly measure the key metrics that indicate your performance. The metrics you choose should be closely tied to your overall growth goals, not vanity metrics with no real-world bearing on actual results.
The more you monitor and measure your growth efforts, the more you’ll begin to see which parts of your execution plan are producing results and which aren’t. If something is working particularly well, double down on it. If a particular tactic isn’t effective, don’t be afraid to pivot.
Continually optimize the activities of your business growth strategies, and you’re bound to come out ahead in the end.
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The power of an integrated approach to growth
Even though you’re making serious investments with any business growth strategy, there needs to be elements of flexibility in your approach. The power of an integrated growth strategy in the modern business landscape lies in its ability to harness the collective strength and flexibility of diverse approaches to drive sustainable success.
By combining market development, disruption, diversification, channel expansion, strategic partnerships, acquisitions, and emerging approaches like OAO, businesses can adapt to changing landscapes, and seize opportunities while mitigating risks.
This synergy fosters a holistic, future-focused approach that propels companies toward expansion. The most resilient, legacy-building brands are those that weave these strategies into a dynamic program, creating a roadmap for sustained growth.