While some entrepreneurs are perfectly happy with their current customer base, turnover and size and have no aspiration to grow, we believe every company should strive for growth. However, it would be a misconception to think that growth largely depends on increasing turnover or size. Organisations can also flourish by further optimizing their products and introducing new services to the market. Opting for further development and responding to new trends will ensure that your company does not contract and remains on edge. But how do you go about this?

To convert some loose ideas about your growth strategy into a structured set, comma, brand strategists uses two relevant models that have amply proven their strength: the Ansoff matrix, in use for over 60 years, and the powerful BCG matrix from Boston Consulting Group.

The Ansoff matrix

It may seem like a simple matrix with barely four quadrants but those quadrants represent four possible growth strategies around which everything else revolves. It is the reason why the Ansoff matrix became such a useful tool for entrepreneurs looking to expand their services or products and hence their business in general. The four growth strategies – market penetration, product development, market development and diversification – are defined by different combinations between new and existing products and new and existing markets.

1. Market penetration:

In this growth strategy you want to get more out of your existing products or services in an existing market. To do so, marketing and sales are key. You want to gain market share from your competitors and ensure that existing customers use your products or services more.

2. Product development

Through product development you want to develop and market a new product or service in an existing market. So you are trying to sell something new to an existing customer. Especially companies that already have a predominant market share in a saturated market often apply this strategy. To do so, cross-selling – offering an additional product or service to existing customers – is the main product development strategy.

3. Market development

In market development you approach a new target group with existing products or services. For example, if you are considering a new geographic market that has yet to be explored, you should look for new customers with needs similar to your existing customers. A common mistake here is when little or no account is taken of cultural or legal differences. Broadening the customer base is another option, for example by expanding your focus to B2B rather than just B2C.

4. Diversification

This is the most challenging and risky growth strategy: launching a new product in a new market. With diversification, make sure to have a very clear idea of where you are heading and work with solid estimates. Proper market research and the right communication will be key success factors here.

The Boston Consulting Group matrix

In addition to the Ansoff matrix, the BCG or Boston matrix can be used to analyse a company’s portfolio with the aim of allocating investments within that portfolio. In this approach, products or services are evaluated on their relative market share (compared to previously determined competitors) and their growth potential within a given market. This helps companies to make important decisions. After an in-depth analysis, the BCG matrix rates your products or service as follows.

1. Star

These products have quite a big market share in a market with high growth potential. They are often a company’s leading products that generate a lot of cash. As soon as a star stops growing and acquires a stable position in the market, it becomes a cash cow.

2. Cash cow

Cash cows also have a relatively high market share, but in a market where only little growth is possible. They represent products and services that have long proven their success and currently require little investment. But in order to generate lasting profits, sound management remains crucial. It is the strong cash flow of cash cows that allows to invest further in products and services in the ‘star’ category.

3. Question mark

Question marks are products and services with a relatively low market share in a market with a lot of growth potential. They are quite promising but will require some investments to grow the market share. As the name implies, decision-makers need to ask the right questions and consider carefully whether or not to invest in further growth.

4. Dog

Dogs have a rather low market share in a market with little to no growth potential. These products and services often generate a negative cash flow or merely generate just enough cash to break even. Because they are rarely worth investing in, dogs are usually sold or die a quiet death.

Whether you want to grow or to invest as an entrepreneur, comma’s brand strategists can advise and assist. With their thorough knowledge of the Ansoff and BCG matrix, they will help guide the growth strategy of your products and services on different markets. Success is just a phone call away!