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Four strategies for achieving business success via growth

Even the very best business ideas require a cleverly thought-out growth strategies if they are going to reach their full potential. Economist Harry Igor Ansoff created an effective and proven method that can be used to plan the success of a business. This method is named after him and is called the Ansoff Matrix. His product -market-matrix can be used to compare and contrast opportunities with risks.

Those seeking business growth need first to ask themselves the following two questions:

  1. Will my business achieve growth with an existing or new product?
  2. Will my business achieve further growth in its existing market or will its expansion involve entering a new market?

Asking these two questions results in four different growth strategies:

  • Market penetration: growth with an existing product in an existing market.
  • Market development: growth with an existing product in a new market
  • Product development: growth with a new product in an existing market
  • Diversification: growth with a new product in a new market

Market Penetration Strategy

Market penetration often appears to be the easiest option, where the product and the market remain the same. To achieve growth with this strategy either the market itself has to grow or the company has to be successful in taking market share from its competitors. In most cases it comes down to taking market share from competitors.
Although this might seem like the easiest option initially, market penetration often turns out to be anything but and is often associated with significant financial cost. More advertising and promotion is often required, which come at a cost. In addition, many businesses find them sucked into reducing prices to gain market share, which also comes at a cost.
Whether or not there is a healthy balance between this huge financial cost and the desired business goal is often questionable. If the market is already saturated or shrinking then this strategy is very unlikely to work. If, however, the market conditions are better and customer demand exists the commercial risk of this strategy is relatively low. This is because the product is already established and consumer behavior is known.

Market Development Strategy

A market development strategy carries a little more risk as the market penetration strategy. Although the product is already established and consumer behavior known, some changes will have to be made to meet the requirements of a group of consumers. Even if the existing target group is also present in the new market, a business can never rule out the possibility of a proven product becoming a flop in the new market.

The following two ways exist to achieve market expansion within a market development strategy exist:

  • Geographical expansion: regional, national and international
  • Expanding the definition and scope of the target group within the existing geographical space.

Weaknesses of the market development strategy include: incorrect understanding of user behavior for the new target group in the new market can lead to the failure of a well established product in an existing market.

Product development strategy

Businesses can also achieve growth in existing markets by improving their products or completely developing a new product to serve the market. Doing this enables a business to significantly expand its customer base. Using this strategy risk is kept to a minimum because the company's concept has already proven itself in the market.

Market Diversification Strategy

A market diversification strategy can be particularly tantalizing. On the one hand it offers the opportunity for huge growth and potentially high margins, but on the other involves higher risk.

Manufacturers of successful products such as the IPhone and SUVs have achieved great success with this strategy. To enter an unknown market with a completely new product requires courage and a readiness for risk. Regardless of how good a product might be, when businesses miscalculate the behavior of the target group, they will be left holding the goods. If potential consumers fail to see the added value of the product, the manufacturer will fail even among wealthy customers.


BASCH Consult
Burkhard Schneider
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10707 Berlin

+49 30 82718442




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