4 Essential Strategies for Business Growth

Learn about 4 essential strategies for business growth: Market Penetration Strategy; Market Development Strategy; Product Development Strategy; Diversification Strategy.

4 Essential Strategies for Business Growth

The four P's of marketing - product, price, place, and promotion - are often referred to as a marketing mix. These are the key elements involved in the marketing of a good or service, and they interact significantly with each other. In a classic Harvard Business Review article, Ansoff (195) identified four strategies for business growth. These four strategies also identify four basic types of marketing plans and the types of investments and activities associated with each. Strategies are defined based on whether the focus is on new or existing products and on new or existing markets.

When a company focuses on selling its current products to existing customers, it seeks a market penetration strategy. The marketing activities that will dominate this type of marketing plan are those that emphasize increasing the loyalty of existing customers so that they are not vulnerable to loss to competition, attracting competing customers, increasing the frequency of product use, and converting non-users into users. Efforts to expand sales by selling current products in new markets are called a market development strategy. Such efforts may involve entering new geographic markets, such as international markets. Creating product awareness and developing distribution channels are key marketing activities.

Some product modification may be required to better suit the needs of the local market. For example, as fast food restaurants have moved to international markets, they have often changed their menus to better suit the food preferences of customers in local markets. Expanding to a new market with an existing product carries some risk because the company does not know the new market well and the company and its products are not well known in the market. The return on marketing investments in such a strategy is likely to be greater than for a go-to-market strategy because of the time required to build awareness, distribution and testing of the product. Creating new products to sell to existing customers, a product development strategy, is a common marketing strategy among companies that can leverage their relationships with existing customers.

For example, American Express has been able to leverage its relationships with its credit card customers to also sell travel-related services. Similarly, cable television companies have expanded their offerings to Internet and telephone services. Research and development activities play a dominant role in this strategy. The time required to develop and test new products can be long, but once a product is developed, creating awareness, interest and availability must be relatively quick because the company already has a relationship with customers. A product development strategy is also riskier than a market penetration strategy because it may not be possible to develop the necessary product, at least at an acceptable cost to customers, or because the product developed does not fit the needs of customers. A diversification strategy involves taking new products to new markets.

This is truly the creation of a whole new business. This is the riskiest strategy and the strategy that is likely to require the most patience while waiting for a return on investment. The 4 Ps of marketing is that marketing is a concept that summarizes the four basic pillars of any marketing strategy: product, price, place, and promotion. These are the key factors involved in the marketing of a product or service. You consider the four P's when creating marketing, promotion, advertising and positioning strategies for your product or brand.

Cause marketing, also known as cause-related marketing, links a company and its products and services to a social cause or problem. Since the four Ps should be considered one in relation to the other, it doesn't really matter in what order you define them. That's why you can find them quoted in a different order than the one used before. In particular, they are often referred to at the place of the order, price, product or promotion. Product: The product you sell or the service you offer. The SAVE model in SAVE means solution, access, value and education. This marketing mix strategy also consists of four elements, and it was also proposed as a superior alternative to the 4P model.

SAVE also diverts attention from the product to the consumer. Some have wondered if the 4-P model is outdated, especially in an era of digital marketing, mobile technology and changing markets and consumer attitudes. However, before you start putting the 4 Ps into practice, you need to start with a solid understanding of your ideal customer and your target market. The marketing mix is the set of tactical and controllable marketing tools that a company uses to produce a desired response from its target market. The marketing mix helps you define the marketing elements to successfully position your market offering.

Marketing is more than just promotion, as shown by the 4 P's of marketing, and promotion should be thought of in conjunction with the other P's.Develop your marketing and growth strategies with the four Ps in mind, then test the market in short bursts to see if your campaign is truly effective. The most important part of thinking about the marketing mix or the four P's of marketing is understanding your customer, your competition, and your company. It may seem obvious but if you're not sure who exactly you're designing your product and services for it can be difficult to understand their specific pain points and where they'll be most receptive to your marketing efforts. The second two techniques - scarcity and covert marketing - are less conventional and potentially controversial techniques. The 4 Ps of marketing are a model for improving components of your marketing mix when launching a new product or service into market. At this stage it is useful to conduct some competitive research to see what other similar products are available in market and what their approach is. Alyssa Gregory is a digital and content marketer, small business consultant and founder of Small Business Bonfire - a social educational and collaborative community for entrepreneurs.

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