GROWTH STRATGIES

GROWTH STRATEGIES
Growth strategies are also called Enterprise Life Cycle (ELC). Enterprise life
cycle is broadly classified into five stages: Start Up, Growth, Continuous,
Maturity, and Decline. Even though it is not always necessary to follow this
classical path, most enterprises show enough evidence of having passed
through more or less similar phases during their growth stages.
Each stage has distinct characteristics as enterprises develop and grow in
course of time. The strategies required to effectively cope-with each stage
also vary. This calls for a proper understanding of each stage to enable
entrepreneurs to adopt the right strategies for growth.

Introducti
on Stage

Early
Growth
Stage

Continuou
s Growth
Stage

Maturity
Stage

Decline
Stage

Introduction Stage
The introduction stage starts when the new product is first launched.
Therefore, this stage is also known as start-up stage. Introduction stage
takes time; production takes place in limited scale; sale is apt to be slow and
that too limited to a small area.
At the introduction stage, you should focus on the following marketing
factors:

Pricing
1 | Page

GROWTH STRATGIES

A penetration pricing strategy may work best for businesses entering a

new market or building on a relatively small market share. It involves
the setting of lower, rather than higher prices in order to achieve a
large, if not dominant market share.

Distribution

Distribution should be selective and limited to a specific type of

consumer, until your product is accepted. Also, different distribution
models should be considered during different periods of the product
life cycle.
Example: new products for different seasons in a clothes shop.

Promotion
Build brand awareness at an early stage. It is worth working with a
brand design or communications agency as you develop a product to
establish a strong brand.
One can use samples or trial incentives to capture early adopters of
the product or service. Introductory promotions can also help convince
potential resellers to carry your lines.

Growth Stage
If the new product satisfies the market, then the product enters into the next
stage called growth stage. During this stage, the enterprise is known to and
accepted by the market. The early adopters keep continuing to buy the
product and the prospective buyers start following their lead, especially if
they hear favorable word of mouth from the existing buyers.
Competitors are attracted into the market with very similar offerings. In the
growth stage, the firm seeks to build brand preference and increase market
share.

Increased Product Quality

Product quality is maintained and additional features and support
services may be added.

Increased Pricing
Pricing is maintained as the firm enjoys increasing demand with little
competition.

Added Distribution Channels

2 | Page

GROWTH STRATGIES

Distribution channels are added as demand increases and customers

accept the product.

Wide Promotional Audience

Promotion is aimed at a broader audience.

Continuous Growth Stage

This is the stage in which the entrepreneur makes efforts to expand his / her
business by way of opening its branches and introducing new product lines.
Business activities at this stage are diversified to reap the maximum benefits
from the business opportunities available in the market.

Delegation of authority
Delegation of authority ensues during the expansion stage.
Entrepreneur needs to be able to accept leadership roles quite different
from their founding roles. One such role requires leadership vision
evidenced through a higher level of aggressiveness.

Partnering
Companies mostly entrepreneurs start to partner with their
competitors or non-competitors to avoid unnecessary competition. It
may also be done to increase core competency or extend the use of
core competency in new areas.

Product And Market Expansion

The enterprise is transformed from a single-line enterprise operating in
a limited market to a multi-line company penetrating new markets with
new products and services. Product and service lines are broadened
through innovation and development.

Expansion
At this stage entrepreneurs want their business to expand and this may
be done by various means including:
Export
Product or service sold abroad.

Franchising
Arrangement where one party (the franchiser) grants another
party (the franchisee) the right to use its trademark or tradename as well as certain business systems and processes, to
3 | Page

GROWTH STRATGIES

produce and market a good or service according to certain

specifications.

Joint ventures
A commercial enterprise undertaken jointly by two or more
parties which otherwise retain their distinct identities.

Maturity
Those products that survive the earlier stages tend to spend longest in this
phase. At maturity, the strong growth in sales diminishes. Competition may
appear with similar products. The primary objective at this point is to defend
market share while maximizing profit.

Add Product Feature

Product features may be enhanced to differentiate the product from
that of competitors.

Low Pricing
Pricing may be lower because of the new competition.

Intensive Distribution
Distribution becomes more intensive, and incentives may be offered to
encourage preference over competing products.

Product Differentiation
Promotion emphasizes product differentiation.

Decline
At this point, there is a downturn in the market. For example, more
innovative products are introduced or consumer tastes have changed. There
is intense price cutting, and many more products are withdrawn from the
market. Profits can be improved by reducing marketing spending and cost
cutting.

4 | Page

GROWTH STRATGIES

As sales decline, the firm has several options:

Rejuvenating Product
Maintain the product, possibly rejuvenating it by adding new features
and finding new uses.

Harvest Product
Harvest the productreduce costs and continue to offer it, possibly to a
loyal niche segment.

Product Discontinuation
Discontinue the product, liquidating remaining inventory or selling it to
another firm that is willing to continue the product.

By imaginatively repositioning their products, companies can change how

customers mentally categorize them. They can rescue products struggling in
the maturity phase of their life cycles and get them back to the growth
phase. And in some cases, they might be able take their new products
forward straight into the growth phase.

5 | Page