What Is a Growth Strategy? (With Tips and Examples)

Updated February 3, 2023

Companies may implement various growth strategies to help their teams increase productivity and meet their objectives. Utilizing these methods can allow a business to improve its efficiency and overall profitability. Understanding these strategies can help organizations plan and integrate processes that drive expansion into alternative markets and increase revenue.

In this article, we explore a growth strategy, share tips for developing your own strategy for growth and list 10 examples of effective approaches for business and marketing.

What is a growth strategy?

A growth strategy is a detailed outline that lists the actions businesses plan to take to expand operations, increase revenue and boost market reach. With a growth strategy, an organization evaluates its financial, market and industry positions to establish clear objectives that help the business develop over time. A strategy for growth can require different departments and teams to work together to further the company's goals. As an action plan, your growth strategy can include the following components:

Goal: Define what the company hopes to achieve with a growth strategy.
People: Outline who is involved in the project.
Product: Consider whether the company has positioned a product to help achieve its goal.
Tactics: Identify the steps the company can take to reach its goal.

Examples of growth strategy goals include increasing market share and revenue, acquiring assets and improving the organization's products or services. The growth strategy your employer implements may include aspects such as:

Investing in new software
Conducting market research
Adding new locations
Hiring new employees
Lowering the cost of a product

5 tips for developing an effective growth strategy

When planning and initiating a business growth strategy, consider the following tips for developing it effectively:

Use a growth strategy template: Consider using a free online template to outline your intended organizational growth process. This can help you integrate all the required elements into the strategy you develop to help the business grow and succeed.
Establish value: Determine what sets your business apart from the competition. You can outline what value the company's products and services bring to customers and why individuals may want to choose the company over other retailers or organizations in the market.
Define customer markets: Determine who your ideal customers are and whether these individuals already purchase goods and services from the company. Then, you can consider how to better address their desires, requests and priorities.
Analyze competitors: Perform an analysis of your competitors to find out what they do that works, doesn't work and how they reach the same market. You can use this information to develop a growth strategy that integrates effective methods for the company's competitors.
Determine where revenue comes from: Identify all the company's current revenue streams and look for ways to add more opportunities to earn revenue. For example, a new product or service offering could be one way to add new revenue streams.
Monitor performance: Effective strategies typically require key performance indicators (KPIs) that allow you to evaluate what aspects of your strategies are effective and which aren't. This information is crucial for managing marketing costs and staying within the project's scope.

10 growth strategies

The following growth strategies can help your business organize, plan and implement various processes that drive sales, increase profits and help widen your customer market:

1. Market expansion

A market expansion strategy can be an effective approach to business growth. This strategy involves a company selling its products or services to a new market. A business may use market expansion as a strategy if there is little room for growth in its industry among its competitors or if the company finds new uses for its products within different markets. For example, a software company may expand its market from IT and technology consumers to education, health care and other market sectors.

2. Market segmentation

Market segmentation is another type of growth strategy that divides the customer market into smaller groups, also called segments, according to various criteria, including customer interests, locations, ages or professions. A business might implement market segmentation as a growth strategy for developing campaigns that are directly targeted to each segment. For example, a clothing retailer might use market segmentation to create segments based on age and then create targeted campaigns for age-appropriate clothing.

3. Market penetration

Market penetration is another marketing growth strategy that businesses can use to increase their revenue. This strategy operates by marketing a company's existing products or services to its current market. This increases the company's market share, which is the percentage of the dollar and product sales it holds within its market compared to its competitors. To implement market penetration, a company might lower its product or service prices, especially if there is little distinction between its products. This can increase its market share by attracting more repetitive sales.

4. Product expansion

Businesses also use strategies regarding the products they develop and sell to support growth and increase profits. Product expansion is one such strategy where a company can expand its product line or redesign products to increase sales and revenue. For example, a technology company can employ product expansion strategies when new technology emerges or older forms become outdated.

5. Diversification

Diversification is a business growth strategy that involves an organization developing and selling new products to new customer markets. It can be a challenging strategy to implement since it may involve extensive product and consumer research. However, with the proper market analysis and research, a company can become quite successful through innovative approaches to appealing to a wider range of customers.

6. Forward acquisition

Businesses may also use acquisitions and mergers as a means of growth and profitability. A forward acquisition is a growth strategy that involves buying component businesses that are essentially a part of a company's distribution chain. For example, a major food grocer might use a forward acquisition to buy up additional properties to convert to its grocer brand. This enables companies to move competition out of the way while enabling more accessibility for customer markets.

7. Horizontal acquisition

A horizontal acquisition is similar in principle to a forward acquisition because it consists of buying another company or organization. However, a horizontal acquisition enables companies to buy competing businesses that add to business growth and development. This strategy also serves companies by eliminating competition and increasing market share.

8. Backward acquisition

Along with the forward and horizontal acquisition strategies, a backward acquisition is an integrative business growth strategy that involves a company buying one of its suppliers to better control its supply chain. This is an effective growth strategy because it allows businesses to develop and launch new products more quickly and for fewer costs. For example, an automobile parts supply company might undergo a backward acquisition to acquire a business that manufactures the parts it sells. This would then allow the parts business to offer custom-made parts to bigger customers.

9. New partnerships

Businesses and organizations can also increase revenue and achieve growth by forming new partnerships with similar businesses that offer similar products and services. This can be highly effective for:

Increasing resources
Boosting staff
Acquiring diverse talent
Gaining access to essential equipment or technology

Another benefit of this business growth strategy is that the organizations that form the partnership gain exposure to each other's customer markets, ultimately increasing sales and revenue.

10. Viral loop strategy

The viral loop strategy is a growth strategy that involves several processes to be successful. When a company implements a viral loop strategy, it may include these steps:

First, customers must try the company's products or services.
Then, the company offers incentives for its customers to share the products or their services with their networks.
These new customers then purchase the company's products or services, try them and also refer others to try the company's products or services.
This cycle repeats consistently and works by increasing the number of customers who purchase from the company.