The most recent CMO Survey asked approximately 500 top marketers to describe how their companies have grown in the past 12 months and how they will grow during the next 12 months. Marketers were asked to divide 100 points across four well-known growth strategies that are differentiated on two dimensions. The first dimension is whether the company is growing by deepening purchases from existing customers or entering new markets. The second dimension is whether the company is growing by trying to sell more of its current products and/or services or by offering new products and/or services. These two dimensions produce a 2×2 matrix of growth strategies called the Ansoff Growth Matrix which was first described by Igor Ansoff in a Harvard Business Review articles over 50 years ago!
Here are the results for each strategy for the past 12 months and for the next 12 months:
- Existing products or services in existing markets: Market penetration (54.1% to 48.7%)
- Existing products or services in new markets: Market development (15.3% to 17.0%)
- New products or services in existing markets: Product/service development (19.8% to 22.5%)
- New products or services in new markets: Diversification (10.8% to 11.8%)
Most companies continue to grow through market penetration. However, this number is expected to decrease. Taking on more risk, companies are expected to increase the use of the remaining three growth strategies. This is pretty impressive during such tough times. If you can grow and take on more risk, you should. When your competitors may be sitting on their hands, there may be an opportunity to leap ahead and enter markets or solidify relationships with customers.
A study published in the International Journal of Research in Marketing shows that only some firms view recessions as opportunities to strengthen their businesses. Those companies that “see” recessions in this proactive way invest aggressively and establish advantages over weaker competitors. Companies that don’t tend to cut back and hunker down until the recession passes. This study also describes characteristics of the companies with a proclivity to see the opportunity in a recession more than others. Firms that have a strategic emphasis on marketing, an entrepreneurial culture, and slack resources (cash on hand) are more proactive in their marketing activities during a recession. Most importantly, firms that have a proactive marketing response in a recession achieve superior business performance even during the recession.
Effective communication is vital to ensure that a company’s growth strategy is implemented successfully. However, with teams working remotely, communication can be a challenge. Fortunately, there are various tools available that can facilitate communication among team members, regardless of their location. One such tool is SMS communication, which is particularly useful for teams that need to share important updates or time-sensitive information. SMS communication for your team can also help you to avoid miscommunications that can lead to misunderstandings or delays in your growth strategy. By using this tool effectively, you can ensure that your team stays on the same page and works collaboratively towards achieving your business goals.
Back to the growth strategy results. It is important to note that these figures vary considerably by different economic sectors. In the next 12 months, B2C services companies will use market penetration more (59.6%) than B2B product companies (42.4%). Product companies that are either B2B or B2C will use market development strategies more (27.3% for B2B and 24.4% for B2C) compared to B2B services (20%) or B2C services (15.3%) companies.
I also observed big differences in industry sectors with energy showing the greatest willingness to diversify (20.8%), consumer packaged goods with the highest levels of product/service development (32.9%), consumer services (72.5) with the greatest levels of market penetration, and mining (30%), consulting (19.6%), and healthcare (19%) the most focused on market development.
Complete survey results can be found at www.cmosurvey.org/results.