Your business will never increase in value without growth. But business growth does not happen accidentally; it's the result of strategic initiatives. There are four basic growth strategies you can employ to expand your business: market penetration, product development, market expansion and diversification.
Growth through market penetration does not involve moving into new markets or creating new products; it's an attempt to increase market share using your current products or services. Carry out this strategy by lowering the price of a product or service, or by increasing marketing efforts to lure customers away from competitors.
Product development means creating new products to serve the same market. For example, a company that produces ice cream for institutional buyers expands its line to include gelato and sorbet. The company can sell these new products to existing customers and grow its business without tapping new markets.
Market development involves introducing your products or services to new markets. You may want to enter a new city, state or even country. Or you can target a market segment. For instance, a bakery that produces breads for the consumer market could enter into the commercial market by baking breads for restaurants and retailers.
Diversification is the most radical form of growth. It involves creating a totally new product for a completely new market. This is the riskiest growth strategy because it's the most uncertain. Failure is a distinct possibility, although the potential of a high payoff may be worth the risk for companies with sufficient financial means.
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