The best way to determine which strategy will work for your company’s product or service is to understand your specific market. Adding a new offering can be costly, risky, and time-consuming, regardless of your company’s size.
Therefore, before you invest in any new offering, test the waters via customer-discovery research. Doing so can help you identify and improve new potential growth areas, provided that you properly execute it.
Key Areas of Business Growth
Most companies find opportunities for growth in four primary areas. These include the following:
- Market Penetration – Starting fresh
- Market Development – Venturing into a new market
- Product Development – Creating a new product in an existing market
- Diversification – Adding new products into an unexplored market
Market Penetration – Starting Fresh
If your business is doing well in a particular niche or market, it can penetrate further by doing more of the same. Often, companies need validation before they are ready to invest more resources into an offering. Otherwise, the business could waste time and money creating something customers don’t buy.
Market Development – Venturing into a New Market
Your company could find growth opportunities by venturing into new markets. For example, the business may try to increase sales by looking for new buyers in a different segment of consumers.
Product Development – Creating a New Product in an Existing Market
Another potential growth opportunity for companies is to create and sell a new product in an existing market. For instance, Ford, Chrysler, and General Motors dominated the U.S. automobile market for decades. But over the past several years, new vehicle companies like Tesla have come into this market with new products (in this case, vehicles).
Diversification – Adding New Products into an Unexplored Market
Diversification promotes growth by adding new products to a new market. In this case, a company may enter a new market or industry it is currently not working in while creating a unique offering for that new market. One example is when big tech companies attempt to expand their customer base by offering new products or services.
How to Use Customer Research to Find Areas of Growth Potential
Many companies regularly seek out areas of growth potential. This usually begins with creating a plan to get as much information as possible from their target customers. While businesses can use different methods, combining quantitative and qualitative analysis via extensive customer-discovery research is typically best.
If you’re seeking ways to grow your company, gather as much information as possible before you commit to spending a lot of money on developing your new product or service. Working with a business analyst can help determine whether your intended offering may work in various markets. Doing so can also help you create a viable sales plan if the offering appears promising.