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INTENSIVE GROWTH OPPORTUNITIES : AN EXTENDED CLASSIFICATION

Anand Kumar Das CCBMDO 07

1. Market penetration, market development and product development constitute the major intensive
growth opportunities open to a firm since they imply attempts to increase sales through stressing present
products in present markets, present products in new markets and developing new products for existing
markets respectively. However, the fact that intensive growth alternatives in themselves are so numerous
leads one to believe that a separate scheme for classifying these alternatives is needed. The approach in
this paper involves employing a number of product-market factors as sub dimensions along the product
and market dimensions. The proposed matrix provides for greater specificity of potential product-market
growth possibilities.

Product-Market Dimensions

2. The User-Uses Dimension. Four strategies that could be used to increase the sales of a product
are:
• Promoting more frequent usage of the product among current users.
• Promoting new uses for the a product among current users.
• Creating new users by expanding the market
• Finding new uses for the product in new markets.

3. The Market Growth Rate Dimension. The stage in the product life cycle and the implied
market growth rate are central to the evaluation of strategic alternatives at the corporate, business,
product and brand levels. A saturated market for a product is seen as one where the total volume of sales
that can be generated (by promoting present uses) is unlikely to increase rapidly, no matter what the
industry does about it and a new brand can gain sales only at the expense of one or more of the
established brands. However market growth rate is increasingly used as a proxy for stage of the product
life cycle where appropriate. In this context it should be noted that the rate of market growth must be
anticipated when developing strategic moves and in most cases is beyond the influence and control of an
individual firm.

4. Present Products : Strategy Options. Effective exploitation of market penetration and


market development growth opportunities can be realized via pursuit of two broad courses of action
namely
• Improved or increased effort along the price, promotion, or distribution
components of the marketing mix with no change in the product component.
• Improved or increased effort along the product component of the marketing mix
with or without changes in other components.

5. New Products : Strategy Options. Product development strategies can be viewed as a firm’s
attempts to increase total sales by offering new products to its present markets. From the consumers’
perspective the principle dimensions of innovativeness are: the degree of change in the user’s
consumption patterns necessitated by the adoption of a new product, which could range from no change
to substantial changes; and the perceived amount of difference between the new product and those on
the market. Quite generally, while the consumer’s perspective constitutes the appropriate basis for
determining product innovativeness, the newness of product, as defined from firm’s standpoint, server to
better differentiate between the range of product development growth opportunities open to a firm.
Notwithstanding the problems confronted in drawing a clear boundary line between a present product
which has undergone minor modifications and new product which is the result of major modifications in
a present product it is possible to classify product development growth opportunities into finer
subgroups which can be differentiated as :-
(a) A major modification of a present product.
(b) A replacement for one or more of the present products.
(c) A variety extension product.
(d) A competitive substitute for one or more of the present products.
(e) A product complementary to one or more of the present products, the new product to be
purchased by the present market for use along with one or more of the present products of the
firm.
(f) A technologically related new product with a demand structure independent of any of the
present products.

An Extended Classification

6. Further to the two sets of factors considered above, there are sixty four distinct growth
possibilities in the three major classes of growth opportunity. This extended classification of growth
opportunities is to limit the infinite possibility into a few basic alternatives and is by no means
exhaustive.

7. Evaluation of Growth Opportunity Alternatives. Profit implication of various growth


alternatives would depend on a number of factors, mainly market structure, competitive structure, cost
structure and demand interrelations. Central to the evaluation process is the determination of criteria
which represent the standards that management believes must be surpassed by growth opportunity
alternatives. Sales potential ease of entry and penetration, cost dynamics (scale and experience effects),
investment requirements and risk and return considerations are among the general criteria found to be
useful in evaluating growth opportunity alternatives. Multistage screening procedure wherein a firm
screens growth opportunity alternatives using culling, rating and scoring criteria, might also be
appropriate in certain situations. There have been cases wherein companies opted to abandon chosen
growth strategies during mid course.

8. With regard to evaluation of growth opportunity alternatives using a predetermined set of


criteria, any set of a priori selected criteria for evaluation might not necessarily include dimensions
critical to specific management situations at a given time. There are cases wherein some insurmountable
problems might prevent the company from formulating and executing strategy to exploit specific growth
opportunity. Thus it is evident that there is a need for a periodic audit of growth strategies pursued by
the firm and its competitors in regard to various product lines. Such audits provide additional insights
and answers to questions regarding intensive growth opportunities.

CONCLUSION

9. The article and the matrix mentioned therein provides for greater specificity of potential product-
market growth possibilities. However there is a need to address certain other related issues in subsequent
research. It has been proposed in the article that a business be defined in terms of its scope and
segmentation/differentiation along the three axes of customer groups served, customer functions served,
and technologies utilized. In defence of this position it has been pointed that an element of ambiguity
exists regarding the meaning of the terms market and product. The market could refer either to the
buyers of the product/service or the functions the product performs for the customer. Similarly, the term
product could refer either to the function it performs or the technology on which it is based.

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