Developing Growth Strategies

Developing Growth Strategies

Companies should always be looking to the future. One useful device for identifying growth
opportunities for the future is the product/market expansion grid. The product/market
expansion grid is a portfolio-planning tool for identifying company growth opportunities
through1). Mar

ket Penetration—making more sales to present customers without changing

products in any way. Market penetration means trying to increase sales of a firm’s present products
in its present markets probably through a more aggressive marketing mix. The firm may try to
strengthen its relationship with customers to increase their rate of use or repeat purchases, or try to
attract competitors’ customers or current
nonusers. New promotion appeals alone
may not be effective. A firm may need to
add a home page on the Internet to make it
easier and faster for customers to place an
order. Or, it may need to add more stores
in present areas for greater convenience.

2). Market Development—a strategy

for company growth by identifying and
developing new markets for current
company products (example, demographic
markets). Market development means trying
to increase sales by selling present products in new markets. Firms may try advertising in different
media to reach new target customers. Or they may add channels of distribution or new stores in
new areas, including overseas.

3). Product Development—a strategy for company growth by offering modified or new

products to current markets. Product development means offering new or improved products for
present markets. By knowing the present market’s needs, a firm may see new ways to satisfy
customers. Computer software firms like Microsoft boost sales by introducing new versions of
popular programs.

4). Diversification—a strategy for company growth by starting up or acquiring businesses

outside the company’s current products and markets. Diversification means moving into totally
different lines of business perhaps entirely unfamiliar products, markets, or even levels in the
production-marketing system.
Planning Cross-Functional Strategies
The final step in the strategic planning process is planning functional strategies.
1). Once the strategic plan is in place, more detailed planning must take place within each
business unit.
2). Each department (such as marketing, finance, et cetera) provides information for strategic
planning.