Growth through Market Strategies

Focus on your small business market strategies for growth. What is strategic planning? How do you build an effective strategic management process? Use an airline industry analysis as a model for different types of strategies (both successful and unsuccessful).

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Your small business growth market strategies are an important part of your strategic plan.

(For more information on "What is strategic planning?' and 'How to build a strategic plan?' go to the strategic plan checklist. )

Part of your strategic plan and your strategic management process is to build a market strategy (or strategies). Three primary strategies to use in building your market and/or your product are market penetration, market development, new product development and diversification (of either product or market or both).

Adding new markets can add significant costs, stimulate product innovation, and grow sales (you need to take the bad with the good).

Use an Airline Industry Analysis as an Example:

The airline industry has both successes, and failures. It has used market penetration, development and diversification strategies to grow markets. The industry has focused strategy on growth, but has failed in recent years to adapt its strategies for economic factors and other market drivers and key success factors.

If using an airline industry analysis to build your own strategies (or any other industry analyses), make sure that you clearly understand the failures, along with the success. Don't model yourself after the wrong decisions or activities.

Three Growth Strategies:

1. Market Penetration

• increase penetration into the market by strengthening your marketing and promotional programs (in particular, consider your marketing mix promotion plan)
• increase penetration into the market by strengthening your small business sales efforts (personal selling, telemarketing, postcard marketing, cold calling, direct mail and direct marketing campaign, and more)
• increase penetration by employing competitive strategies to gain market share from your competition

2. Market Development

• target marketing of customers who are not buying: why are they not buying, how can you appeal to those buyers
• focus on market segmentation: look at new market segments and potential customers in those new segments
• success with a market development strategy is dependent upon thorough market research and planning.

3. Market Diversification

• add new markets and increase sales and profitability
• add by expanding into new market segments within your industry
• add by expanding into new market segments outside your industry
• Diversification may require new equipment, new facilities, new operating skills and new staff.
• Merger and/or acquisition of other businesses might be an attractive method of diversification – you can buy the equipment, the facilities and acquire the staff and skills with the new firm.
• Partnerships and/or alliances with other businesses can be an alternative method of market diversification.
• A diversification strategy can be used as either an offensive or defensive strategy. As an offensive strategy, a business could use it to grow market reach and market share. As a defensive strategy, a business could use it to protect a shrinking or stagnant market and extend the market’s life-cycle.
• There are significant advantages of diversification. For example, diversification can minimize the risk of seasonality for a specific product line in a specific market. Furthermore, a concentric diversification strategy (which is one where the market, or product, or service is related) can leverage existing fixed costs and minimize the overall cost of goods sold.

There are risks associated with each strategy. As a small business owner, you must assess each risk, how to mitigate the risk and whether or not it is still worth while moving forward. Focus on successful business growth, and ensure that you develop your market strategies to lead you in the right direction.

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