The objectives, which a company wants to achieve, can be varied. They can range from sales revenue maximization, increasing market share to growth. Growth is one of the most common and sought after corporate objectives because of its relative advantages. This is so because many perks come with the expansion of a business, which appease almost everyone.
When a company grows it achieves economies of scale, it increases its market shares and thus wipes out competition. A company starts making more profits and can use these in constructive ways such as employing specialist workers and improving the variety and quality of products, by delving more into research and development. These are only some of the merits of growth.
The main question that most companies have to tackle is how should this growth take place. Each business wanting to expand has a choice of marketing strategies, which were arranged in a matrix by business writer Igor Ansoff. The matrix plots how safe or risky various marketing objectives are and how they can be used to judge the likelihood of success.
Market penetration is when you sell more amount of the same product in the existing market through better advertising, promotion, packaging etc. For example the increased advertising and better packaging of Shezan fruit juices led to an increase in its market share. This strategy may be appropriate in short-term when the market is static or when the business is waiting to see how situations develop. However, in long-term such tactics are unlikely to be realistic or beneficial. They may reflect a lack of strategic awareness on the part of the management. This strategy carries the least risk of failure and the lowest level of reward.
New Product development is when you make new goods to add to the existing markets. Marketing expenditure will need to be high to establish the new product. However, it will benefit from the existing brand reputation. This...