Introduction to Marketing - strategies for growth, transactional marketing and relationship marketing

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Bukola Akanni        P1        Task 1                

Growth strategies

There are four types of Growth Strategies which are:

  • Diversification
  • Product development
  • Market penetration
  • Market development

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Diversification: this is a strategy for a company that seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification is the riskiest of the four strategies presented in the Ansoff matrix. Going into an unknown market with an unfamiliar product offering means a lack of experience in the new skills and techniques required. Therefore, the company puts in a great uncertainty. Because of the high risks explained above, many companies attempting to diversify have led to failure. Although, there are a few good examples of successful diversification like:

  • Virgin Media moved from music production to travel then to mobile phones, broadband, internet and TV.
  • Walt Disney moved from producing animated films then to theme parks and vacations places.
  • Canon diversified from a camera-making company into producing an entirely new range of media equipment for movies and music.
  • Apple store moved from PC laptop to iPod Shuffles and touch first, second, third and fourth generation.

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Product development: this is a strategy that brings a new product to market to an existing market or modifying existing products so they appear new, and offering those products to current or new markets. Good exmples of Product Development could be:

  • Technology: Companies that can strategically identify opportunities to capitalize on technology to provide products and services more conveniently, less expensively and in new ways, can stay ahead of the curve and avoid the unfortunate situation of having their products and services become obsolete. A good example of this in recent years is the evolution of videotapes and then DVDs that could be rented at stores, to the mailing of DVDs to consumers in their homes and now to the move toward online rentals.
  • McDonalds is always within the fast-food industry, but frequently markets new burgers.
  • Customers need: this website also shows that, classic strategy for product development is simply focusing on customer needs.

Market penetration: This is a penetration that occurs when a company enters a market with current products. The best way to achieve this is by gaining part of their market share. Other ways include attracting non-users of your product or convincing current clients to use more of your product or service by advertising. Market penetration occurs when the product and market already exists. A market penetration strategy seeks to increase market share of the current product or services in the existing market. This strategy adopted by the firms to raise their sales revenue without making changes in the products or services. The other dimension of market penetration is the existing market which means firm already offering products or services to the customer but can forecast that the existing sales figures can be improved by working on marketing penetration strategy. Market penetration strategy can be implemented by offering sales, Increasing sales force, increase distribution and promotion of products, more expenditure in marketing and advertising activities will results in increasing sales. Examples are:

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  • Pizza hut offering discounts to the customers at night to increase the sales and each customer purchase value.
  • Mobile service providers (Orange, T-mobile, Three network and Vodafone) offering low price packages to increase talk time of the customers.

Market development: This is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage. This is also a strategy for a current brand when it expands the potential market through new users or new uses.  New users can be found in new geographic segments, new demographic ...

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