4 strategies for growth

Do you want to expand your business? Where to start? Specialist Igor Ansoff analyzed the main paths to growth. I chose yours.

After getting through the first stages there are different growth paths for a venture, depending on the strategy on markets or products.planning, implementation and consolidation in the market, you may want to grow your venture. But there is no single path to growth. Behind every business that has successfully expanded there are several alternatives.
The consultant and mathematician Igor Ansoff described in the matrix "Market-Product" four basic ways to propose the development of a business. Taking as a starting point the combination of products and markets that define a company (for example, children's toys or coffee for companies in La Plata), he outlined the following strategies:

Strategy 1. Market penetration

It is about growing with the current products in the current markets, increasing participation by deepening the strategy. This is possible through advertising, promotions, special actions or price reductions. A clothing company, for example, can sell more to its customers by offering the second garment at 50% or by making agreements with cards so that on certain days sales are increased thanks to joint promotions.

Strategy 2. Product development

 It consists of offering new products to current customers, thus increasing the total volume of sales. For example, a bakery can add pizzas, empanadas and take-out desserts to its product portfolio, or add tables in its premises and offer cafeteria service. In this way, customers who already know the business will be able to dedicate a larger budget to it.

Strategy 3. Market development

 The focus of this strategy is to reach segments that are not customers of the company, keeping the current products. It can be reaching a new type of consumer through marketing actions (for example, the case of Fernet, which is a few years was repositioned as a drink for young people) or through geographical expansion, given by exports or the opening of new branches, as the case may be. Franchising allows for rapid growth in the latter direction.

Strategy 4. Diversification

 While in the previous strategies we operate in the same product-market area or modify only one of the elements, this growth path implies modifying both the products and the markets. It is a risky expansion as it implies moving simultaneously in two new directions. Of course, in successful cases, there are usually points of contact or synergies between old and new businesses. An established hotel, for example, could diversify into housing construction or a food factory could invest in a restaurant chain.

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Rana Moneeb Joined: March 16th, 2020