Most companies have growth stages and plans to increase sales and profits. The method a company uses to expand its business is largely contingent upon its financial situation, the competition and possibly government compliance. Some common growth strategies in business include market penetration, market expansion, product expansion, diversification and acquisition.
Market Penetration
A market penetration strategy is when a company decides to market existing products within the same market it has been using which results in an increased market share.
Market Expansion
Market Expansion is selling current products in a new market. This may be where the competition may be such that there is no room for growth within the current market or if a business does not find new markets for its products, it cannot increase sales or profits.
Product Expansion
A company may expand its product line or add new product features to increase sales and profits. When businesses commence product development and expansion strategies, they continue selling within their existing market.
Diversification
Diversification is where a company sells new products to new markets. This strategy can be risky and will need to be well researched to determine if consumers in the new market will potentially like the new products.
Acquisition
Acquisition is when a company purchases another company to expand its operations. This strategy can be used to expand a businesses product line and enter new markets. A company must know exactly what it wants to achieve when using an acquisition strategy, mainly because of the significant investment required to implement it.
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