What is Growth Strategy

Growth strategy is a corporate strategy that focused on expanding the business or increasing
revenue in various ways. The company adopts the growth strategy when they need to increase
the size or scope of the business to the next level.

There are many types of growth strategy, but the growth strategy can be categorized into
three categories including Intensive growth, Integrative growth, and Diversification growth.

• Intensive growth is the growth strategy that is related to the products and markets.

• Diversification growth is the strategy that focused on expansion into a new business that is
may be related or not related to the current business.

• Integrative growth is a strategy that is aimed at expanding into the related business.

Intensive Growth Strategy

Intensive growth is the growth strategy that is related to the products and markets. The
intensive growth strategy focused on increasing sales in various ways to increase the
company's revenue. For example, when a company has a product that it wishes to sell to a
new market segment. To do this, it is necessary to design a new strategy to offer it more
effectively.

• Market penetration focused on selling more existing products to existing markets.

• Market development focused on selling existing products to new markets.
• Product development focused on developing new products and selling to existing
markets.
• Diversification growth focused on expansion into a new business (new products in
new markets) which is may or may not be related to the current business.

The intensive growth strategy + diversification growth strategy is also known as the four
strategies of the Ansoff

product-market matrix. The Ansoff matrix is a strategic tool that helps the manager select a
growth strategy along with the relationship between product and market.
Market Penetration

Market penetration is a strategy that focused on selling more existing products to existing
markets or finding new customers within the existing markets.

Normally, this type of growth strategy often involves encouraging current customers to buy
more each time they go to the store or buy more frequently. This can be implemented by a
sales promotion, offering the new utility of the current product, bundling the product, and
lowering the price.

Product Development

Product development is a growth strategy that focused on developing new products and
selling to existing markets. For example, Pepsi and Coca-Cola launched a new flavor of cola.

The company that adopts the product development strategy may try to find and satisfy the
unmet needs of the existing customers to fulfill.
Market Development

Market development focused on selling existing products to new markets. Market

development is about exploring new customers in new geographies and finding new
customers in existing geographies. The targeted new customers could be of a different
gender, age, region, or country.

The market development strategy is the highest risk among the three intensive growth
strategies because it is almost the same thing as creating a new product.

Diversification Growth Strategy

Diversification growth is a growth strategy that focused on expansion into a new business
(new products in new markets) which is may or may not be related to the current business.
There are two types of diversification strategies undertaken by the organization;

Concentric diversification focused on expansion into a new business (selling new

products to new markets) that are related to the original businesses, products, markets, or
activities.

Conglomerate diversification is a contrast of the concentric, the conglomerate

diversification is focused on expansion into unrelated businesses, products, markets, or
activities.

The diversification growth strategy holds a high risk of failure since it is about creating new
products and entering an entirely new market. But it generally reduces specific industry risks,
the profit of this business unit might offset a loss in another business unit during the
downturn.

Integrative Growth Strategy

Integrative growth is a strategy for growth by expansion into the related business with no
change in the customer groups. For example, when a company has a product that it wishes to
sell to a new market segment. To do this, it is necessary to design a new strategy to offer it
more effectively. The integrative growth strategy can be separated into horizontal integration
and vertical integration:

• Horizontal integration strategy is a strategy that the company expansion by acquiring or

take-over a similar business in the industry.
• Vertical integration strategy is a strategy to expand the business into supply chains (the
backward integration) or to distributors (the forward integration) by acquisition or
development of new businesses.