10 Growth Strategies for Your Product
"What wants does the consumer have that are not being adequately satisfied by the products or services offered him today? It is the ability to ask this question and answer it correctly that usually makes the difference between a growth company and one that depends for its development on the rising tide of its economy or industry." –Peter Drucker, The Practice of Management, 1954 This quote from Peter Drucker is a perfect representation of the difference between a company being reactive about growth (rising and falling with the tides) versus proactive about growth. As an MBA student, I remember my Strategic Marketing professor, Stew Bither, introducing me to Igor Ansoff's Growth Matrix as a framework for developing a growth strategy and Michael Porter's Five Forces. Both have become my most referenced and used concept I learned in graduate school. As I moved into product management and then product leadership, growth was always a key objective. I would always look at my current products and markets in context to Ansoff's Growth Matrix. It was the foundation for every Growth Strategy I created. This blog is a follow-up to my blog "Situational Growth Strategy for Your Product," where I did a reasonably deep-dive on Ansoff's and my concept of Situational Growth Strategy. If you have not read that yet, you may want to start there as these ideas will be additive. 10 Growth Strategies In that blog, the Situational Growth Strategy Matrix recommends which of Ansoff's generic growth strategies you should be focusing on (Market Penetration, Market Development, Product Development, or Diversification) based on your current situation. This article will take each of those generic strategies a level deeper and identify the 10 potential growth strategies for your product. Market Penetration Growth Strategies (4) Let's get started with Market Penetration. Within Market Penetration, there are four (4) potential growth strategies: Grow Your Customers; Grow by Taking Your Competitors Customers; Grow by Increasing Your Success with Prospects; or Grow by Getting Non-Customers to Enter the Market. Grow Your Customers is acquiring growth from your existing customers with the products you currently have. This growth could come from price increases, increased revenue per unit (RPU) through usage or other means, increased units (more widgets, more users), repeat business, or increased retention. Grow by Taking Your Competitors Customers is driving growth by taking customers from your competitors. This growth could be organic or inorganic and tends to be a strategic fit for more mature product-market segments. Grow by Increasing Your Success with Prospects focuses on increasing your revenue from those currently shopping for a solution. This growth has two parts: increasing the number of qualified leads you get from marketing programs and increasing your close rate on those qualified leads in your sales organization. Grow by Getting Non-Customers to Enter the Market drives growth from those customers you think should be interested in you or your competitors' solution but are not in the market yet. The earlier you are in your product-market segment maturity, the more growth will be finding these Non-Customers. Understanding why they are not in the market yet, and figuring out how to get them into the market is necessary to execute this strategy. Market Development Growth Strategies (2) Within Market Development, there are two (2) potential growth strategies: Grow into an Adjacent Market or Grow Into a Similar Market. Grow into an Adjacent Market drives growth by identifying an adjacent market segment with similar traits in their needs, wants, motivations, and value profile compared to your existing markets. The difference in those traits for an Adjacent Markets and existing market are often less than 20%. This low difference means there will be little if any product modifications required to make when entering this Adjacent Market and pursuing these customers. Grow into a Similar Market is driving growth by identifying market segments that have similar needs and wants. Similar Markets have between a 20% and 50% difference in needs and wants compared to current market segments. It will be more difficult entering compared to an adjacent market but will leverage a strong foundation from your existing product. If the difference is more than 50%, you are creating a new product, and as such, this would become Differentiation . Product Development Growth Strategies (3) Within Product Development, there are three (3) potential growth strategies: Growth with an Add-on Product, Grow with a Cross-Sell Product, or Growth through Disruption. Grow with an Add-on Product is driving growth by developing a product that adds to an existing customer's functionality and value proposition. These types of sales are known as up-sells. As you have an existing customer with an existing product, you are looking to up-sell them on the Add-on product you developed. Grow with a Cross-sell Product is driving growth by developing a new stand-alone product that addresses a new and/or different need for our existing customers. These Cross-sell products can be identified by engaging with your existing customers. This engagement allows you to understand what other needs or wants they have that are not being served or served well enough. Grow through Disruption is growing through an innovative alternative solution that addresses the needs and wants your current product addresses. This innovation is often through solutions and technologies that disrupt the existing product. This growth option is where the concept "fall in love with the problem, not the product" comes in to play. Diversification (1) There is only one option within diversification, taking a new product into a new market. The reality is that this is the most difficult option, but sometimes the truth is it is the best or only opportunity for growth. If diversification is your best opportunity, leverage your core competencies and differentiation as much as possible and stay in the upper-left corner where there may be some ability to leverage your current markets and products. Bringing it all Together With an understanding of Ansoff's generic growth strategies, the Situational Growth Strategy Matrix, and the 10 Specific Growth Strategy options, you are ready to build a growth strategy for your product. Effective strategy is about focus. Evaluate all of your growth options with the current situation in mind. Identify how these options align with your core capabilities, differentiation, and corporate strategy. Then, and only then, make the conscious decision to focus on the few you can fully resource. ------- If you liked this post, sign-up to see more!