Understanding Organic Growth Strategies

If the "Merger and Acquisition" route is not in your plans, then YOUR Company needs to be positioned for Organic Growth. As this path to incremental sales can be longer than the relative instant infusion that accompanies inorganic growth (externally generated), it is critical to understand how your capabilities meet the various needs of the market when selecting the right strategy for you.Obviously, organic growth is especially prevalent during the early stages of a company's commercial establishment, but opportunities continuously present themselves if you listen to the market. That is, if YOUR Company is truly committed to meeting customers' needs, the implementation of new strategies will result in significant revenue generation - IF YOU ARE PREPARED.Each of the (4) strategies in the Ansoff Matrix (right) carries a certain amount of risk, but the potential for long-term sustainable success is strong. The organic growth strategies within it are:Market Penetration (Same to Same) Also known as the "Protect and Build" strategy, this conservative approach is when a company consolidates and stabilizes its position in the market by selling more existing products to existing customers (Same to Same). Through the leveraging of existing resources and capabilities, the company strengthens its foothold by capturing more share in familiar markets. There is minimal risk associated with this strategy, as there are no "new" elements involved.Product Development (New to Same)In this strategy, new products are introduced to existing customers (New to Same). Companies that are adept at engineering new product innovations are well positioned to grow with this strategy. A salesforce that is in tune with their customer base is usually not shy about reporting back to the factory on what their customers are asking for. It is critical to filter through the myriad requests to identify those that offer true sales opportunities. There is more risk associated with this strategy than the Market Penetration approach, because there is an investment associated with the "new" product element.


Market Development (Same to New)When a company chooses this approach, they have decided to promote their existing products into new markets (Same to New). "Markets" are either defined as industry segments or geographical territories. Focused market research is necessary, not only to uncover the potential markets, but to ensure that any necessary regional considerations are accounted for. For new market segments, it is often necessary to utilize a new channel to reach the target customer base. As with the Product Development strategy, there is moderate risk here because of the "new" market element.Diversification (New to New)The riskiest of the growth strategies, Diversification is when a company pursues new markets with new products (New to New). As both Product Development and Market Development initially lie outside of the company's core competencies, there is often a significant investment associated with this strategy. Companies rely on the strength of their brand loyalty when implementing a Diversification strategy, and correctly executed, it can reduce the overall business portfolio risk.In summary, organic growth is often safer than inorganic (externally generated) growth because it can be more difficult and riskier to acquire and integrate another existing business into an existing company. If YOUR Company possesses the necessary resources and capabilities, there are great opportunities for you to enjoy highly profitable organic growth indefinitely.Contact Brand Performance today to learn more about the individual strategies and how to design one or more for a long run of profitable growth for YOUR Company.