Marketing Growth Strategies

Companies often race to develop new products to stay ahead of the competition. As a result, their product portfolio can extend to several brands, product lines, and multiple variants. However, a large portfolio would require plenty of assessment to ensure there is no redundant or low-quality product. This also helps the company decide whether to invest or disinvest in a product line. Once a product portfolio is determined, marketers can work on marketing growth strategies to bring these products to the consumer and generate income for the company. Marketing growth strategies will be the focus of today's explanation.

Marketing Growth Strategies Definition

Marketing growth strategies are part of marketing planning.

For strategic marketing planning to be successful, the company has to define its mission and objectives and understand how it can leverage its capabilities in a changing market. The process of strategic marketing planning is as follows:

1. Define corporate mission and purpose,

2. Define company objectives,

3. Analyze the external and internal environment,

4. Assess the company's portfolio,

5. Set marketing strategies.

Our focus in this explanation will be on steps four and five - the business's portfolio and market strategies.

We can define marketing growth strategies as follows.

Marketing Growth Strategies in Business

To set marketing growth strategies, a business must first examine its portfolio.

The business needs to review its portfolio to evaluate strengths and weaknesses and identify opportunities for business growth. This process is known as portfolio analysis. During portfolio analysis, the company decides which brands and products to keep or stop investing in.

The first step of portfolio analysis is determining strategic business units (SBUs). Depending on the company's size and operations, an SBU could be an inter-organizational team working on a product line, a brand, or a single product. After identifying all essential SBUs, the company will determine which product line presents the most opportunities and should receive more investment.

A popular tool for portfolio analysis is the Boston Consulting Group Matrix (BCG Matrix). Figure 1 below shows the main components of a BCG Matrix, which includes rating SBUs based on their market share and growth.

Fig. 1. BCG Matrix, StudySmarter Originals

The BCG Matrix divides SBUs into four different categories:

1. Stars: These products/brands have high market growth and market share. Stars present vast growth opportunities for the company and are worth investing in. However, stars also require high levels of investment to finance their growth.
2. Cash cows: These products/brands have a high market share but present lower levels of growth. Due to their established nature in the market, they require less investment from the company and deliver a constant stream of revenues. However, it is unlikely that cash cows will experience high levels of market growth in the future.
3. Dogs: These products/brands present low market growth and market share. Dogs may or may not produce enough revenue to sustain themselves, and the business should avoid further investing in these products.
4. Question marks: These products/brands have low market share but high market growth. Question marks require high levels of investment to maintain or increase market share. However, if the company implements effective marketing strategies, question marks have the potential to turn into stars. Therefore, it is up to the company to decide whether to invest further in them.

Of course, the company might have several SBUs in each category. For example, there are two stars, one cash cow, and five question marks in its portfolio. It is up to the company to decide which strategy to pursue with each SBU. It can use a build strategy to increase market share through investment or a hold strategy to keep the SBU at current levels. It can decide to harvest the SBU to maximize revenues in the short run or to divest it by completely halting production.

Marketing Growth Strategies Stages

Let's now take a look at the marketing growth strategies stages.

Companies can use various marketing planning tools that help them assess market opportunities. After the business portfolio has been assessed, the development of marketing growth strategies begins. To identify and evaluate growth opportunities, the company can use the Ansoff Matrix. The Ansoff Matrix is also called the product/market expansion grid (see Fig. 2 below).

Fig. 2. Ansoff Matrix, StudySmarter Originals

Marketing growth stage 1: market penetration

As a growth strategy, market penetration can be used by companies that want to increase the market share of one of their existing products in existing markets. This strategy involves the least risk as the business is doing what it already knows best. Rather than developing new products or entering new markets, the company can 'grow' the product through various marketing mix adjustments.

Marketing growth stage 2: market development

Market development is another type of marketing growth strategy. When using this strategy, the business attempts to find new markets for its existing products. A market development strategy involves higher levels of risk as the company is trying to enter unexplored markets. As a result, marketers must conduct extensive market research when employing this strategy.

Marketing growth stage 3: product development

The third option for growth includes product development. When pursuing a product development strategy, the business will develop new products to sell in existing markets.

This strategy presents higher levels of risk as the business must develop a unique product. As you might already know, new product development involves spending on research and development (R&D), new communications campaigns, etc. If the new product fails in the market, there is no way for the business to recover its costs (sunk costs). However, if the product is successful, there is high profit and growth potential.

Marketing growth stage 4: diversification

Finally, the business might consider diversification. The company may develop new products or purchase new businesses to enter new markets. This strategy involves high levels of risk as the company is entering untapped markets and developing products in areas it is not yet familiar with. A diversification strategy may offer high returns; however, the business must consider how it positions its new product or brand.

Marketing Growth Strategies Examples

Let's finally look at some marketing growth strategy examples.

Another example of marketing growth strategies can be observed through the Dutch beer manufacturer Heineken.