Market Growth Expansion
If you want to sell more of your product, such as personalized mugs, you can enter a new market. If you want to sell more of your coffee, you can open a new store in a new location. With the advent of the internet, the market can be the world if you believe you have a product that people all over the world will need, such as a better toothbrush or shampoo. This market development plan can, over time, keep expanding, such as McDonald's stores.
Expand Your Product Offerings
To grow your small business, you can expand your product offerings, giving consumers more chances to spend money at your company. For instance, if you are a coffee shop, try adding in morning pastries. Or, take a new twist on your same products that are selling well by adding in new features and charging more for them. For example, you sell toothbrushes. You can make your toothbrush automatic with different settings that consumers will pay more money for because it makes their lives easier.
Increase Your Market Share
When you decide to increase your market share, you are keeping the same products and/or services, but you are essentially flooding the market with them. This market penetration strategy usually happens when you lower your prices in order to get consumers to switch from buying your competitor's product to yours. You can also find new uses for your products. For example, a toothbrush is predominantly used to clean your teeth. However, people use toothbrushes to scrub other things, such as their showers and sinks in order to remove other dirt and grime as well.
When your company decides to grow through diversification, you are taking the growth strategy of expanding your product offerings, but taking it to new markets as well. This growth strategy affords more risk than expanding in your existing market because you already have an established customer base who will see your new product and be more inclined to buy it because they have experience with your old products. When you enter new markets with new products, you are virtually a startup company again. Here is where market research can pay off big time. Apple did this with the iPod, a completely new product that attracted new customers.
Growth Through Acquisition
One of the more costly growth models, but extremely profitable when implemented correctly, is the growth through acquisition idea. Here, you want to expand into new markets and maybe with new products so you buy a company that is already established there that is most likely already offering a product that is very similar to yours.
The Hedaya Capital Group in New York notes that this growth strategy is also considered risky because too many companies buy other companies with no goal in mind. Buying companies just for the sake of it won't get you anywhere. You have to be clear on why you are purchasing X company and what it can do for you. You can buy a competitor, a supplier, or someone in your distribution chain.