intensification is an internal growth strategy
Growth will accrue if the new products yield additional sales and market share. Expansion strategy is adopted to accelerate the rate of growth of sales, profits and market share faster by entering new markets, acquiring new resources, developing new technologies … It is also used in determining whether it is wise or unwise to keep to the existing market for the present products or move out and expand into another. Intensive expansion of a firm can be accomplished in three ways, namely, market penetration, market development and product development first suggested in Ansoff’s model. The Ansoff matrix is a widely used strategic planning tool that provides a simple, yet effective framework to help companies plan and implement an effective growth strategy. The company can create different or improved versions of the currents products. They use their own resources or acquire them from outside to increase their size, scale of operations, resources (financial and non-financial) and market penetration. Expansion strategy is an important strategic option, which enterprises follow to fulfil their long-term growth objectives. Intensive Growth Strategies: Intensive growth strategies aim at achieving further growth for existing products and/ or in … The most suitable may be derived only after all the variables have been considered. The first three strategies are usually pursued with the same technical, financial, and merchandising resources used for the original product line, whereas diversification usually requires a company to acquire new skills, new techniques, and new facilities. To portray intensive growth strategies, Igor Ansoff presented a matrix that focused on the firm’s present and potential products and markets (customers). Increasing its efforts to attract its competitors’ customers. They pursue it to gain significant growth as opposed to incremental growth envisaged in stability strategy. Intensification strategy is followed when adequate growth opportunities exist in the firm’s current products-market space. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. Ansoff matrix is shown below: Ansoff matrix provides four different growth strategies: Ansoff matrix is used by companies which have a growth target or a strategy of specialization. Moving forward, this area will serve as the focal point for higher-density growth and intensification in Barrie. The market penetration strategy is the least risky since it leverages many of the firm’s existing resources and capabilities. The firm must have adequate financial, technological and managerial capabilities to expand the way it chooses. Market penetration strategy generally focuses on changing the infrequent users of the firm’s products or services to frequent users and frequent users to heavy users. Other advantages of diversification include the potential to gain a foothold in an attractive industry and the reduction of overall business portfolio risk. It is also a subset of diversification strategy as it involves undertaking certain activities or business, which the firm was not dealing earlier. This strategy is likely to succeed for products that have low brand loyalty and/or short product life cycles. By “growth strategies” I refer to economic policies and institutional arrangements aimed at achieving economic convergence with the living standards prevailing in advanced countries. Firms less endowed may search for niche segments. Alternatively, the product development strategy involves developing new products to sell in existing markets of the company. We’ll explore more reasons why you need an internal communication strategy in a moment. Market development options include the pursuit of additional market segments or geographical regions. Reduction of the number of steps. This is the hard work of acquiring and keeping customers. Your email address will not be published. Intensification growth strategies involve achieving greater sales through increased market share. Mergers with or acquisitions of other firms are considered a means of external growth. A business that operates in an expanding market can grow through market penetration. This strategy is aimed at increasing the company’s store penetration. Typical schemes used for this purpose are volume discounts, bonus cards, price promotion, heavy advertising, regular publicity, wider distribution and obviously through retention of customers by means of an effective customer relationship management.