There is a saying: "The one who makes simple things sound complex, is an expert. The one who makes complex things sound simple, is a teacher". I decided I won't be a growth marketing expert, but a growth marketing teacher. My goal is not to hypnotize you with frameworks, definitions and data, but to show actionable, affordable ways to grow a business.
What is a growth strategy?
Simply put, it's a plan for a business to become bigger and more successful financially. It answers a few crucial questions:
How to get more customers
How to sell more to existing customers
How to reach new markets
How to improve the existing product
How to add more products
Does a small business need a growth strategy?
Absolutely! Any business has one thing in common - receiving profits, it's in the definition of a business, regardless of whether it's a one-person company or a huge corporation. Financial success is never guaranteed to either of them. However, having a clear goal and a clear plan on how to get there dramatically increases the chances of success. I will even say that a growth strategy is even more important for a small business, because growth is crucial to achieve stability.
What are the growth strategies a small business can use?
Definitely not mergers and acquisitions! At least, not yet. Let's wait a few years, until your business becomes so successful that you'd be ready to take over a few competitors 😉
I will be using chocolate as an example for all the growth strategies, just because everything is nicer with chocolate. It's also easier to explain strategies based on a business with a tangible, familiar product.
Market expansion
Market expansion is when a business grows by selling its products or services to a new market. New market -> new people -> new customers -> higher sales.
Why expand to a new market? It depends on the situation. Sometimes, competition in the current market becomes too fierce. Sometimes, a business learns that there's demand for its product from another group of people, different from the usual target audience.
What types of market expansion are there?
Typically, we are talking about expanding sales to a new territory, or to a new industry. In my opinion, expanding to a new territory is the easiest way to grow nowadays. There is no shortage in tools that will allow you to open an online shop and even start selling worldwide, if you like!
Market segmentation
There is one sure way to fail in business. It's to pretend that your product is for EVERYONE. It's never the case. Any product or service has an audience and it's any business's crucial task to define it as precisely as possible,
Target audience serves as a reference for what kind of communication style a business chooses, how promotion campaigns are designed, which product benefits are highlighted. Sometimes, to achieve business growth it makes sense to go into more detail and divide the audience into parts, or 'segments'.
If we take a chocolate shop owner as an example again, her target audience was "people in Amsterdam who love excellent chocolate". Turns out, it was not specific enough. In order to grow, she decided to create segments and this is what came out:
Connoisseurs who love quirky chocolate flavours
Milk chocolate enthusiasts
Hot chocolate lovers
As soon as she tailored marketing campaigns to each of the segments, the sales went up! No surprise - potential customers react very positively when their specific needs are heard and catered to.
Market penetration
Market penetration is a great marketing and growth strategy for your business if it's relatively new and you need to establish the position. In contrast to market expansion or market segmentation, market penetration strategy uses the same existing products in the same market. In order to penetrate the market, a business often lowers prices for a while, aiming to attract part of it's competitors' customers.
It works best on a market where a lot of businesses offer similar products. Imagine a street with many coffee places. If all of them have a standard menu and similar coffee quality, a new coffee place that opens can penetrate this market by lowering its prices.
Important: Lowering the prices cannot be a long-term strategy unless a business can maintain profit margins with lower selling prices. Best course of action would be to attract new customers, and then to develop a product that stands out enough to trigger repeated sales, even when the prices go back up.
Product expansion
Product expansion is a great way to boost sales and makes for a simple but effective growth strategy. In spite of a serious-sounding name, it just means adding more product to what a business currently sells.
Our friend, a chocolate shop owner from Amsterdam, used to sell dark and milk chocolate bars. But then she learned that more chocolate products are in trend now! She added chocolate-covered nuts and hot chocolate mixes to the shop assortment. Her sales went up, customers appreciate more variety, plus it was good timing - hot chocolate is perfect in winter!
Diversification
Diversification is a bit like not putting the eggs in one basket. It's a good strategy for a stock market, as well as for business growth. 😎 It means that a business is tapping into a new customer market. Compared to the other 4 strategies, it's the most challenging one, because it may require extensive preparations, e.g. market research, buying equipment, introducing the product to the new customer market, etc.
Back to our chocolate shop owner, she saw an emerging trend for natural cosmetics. Cacao butter is an excellent ingredient for premium skincare - it moisturizes, protects and it smells amazing! She decided to tap into the new market and start a chocolate skincare line with natural cacao butter. It was not easy! Weeks of research, months of looking for someone who can help to develop recipes... Finally, it was launched and it was a success. By diversifying her business, she managed to attract a totally different kind of customer - beauty salons, spa and wellness centers and more.
Not sure which growth strategy is best for your business? Book a free call and let me know what you current challenge is. I will make sure to solve it for you.
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