Growth & Consumption

Question 1

• Increase
• Reduces risk of
• Diversify
• Achieve
• Increase market power (= barrier to entry & buying power)

Answer 1

WHY DO BUSINESSES WANT TO
GROW?

Question 2

If there is a gap between
current & desired sales
→ firms must address it through 3 types of growth

Answer 2

Strategic planning gap

Question 3

grow current businesses
least risky
should be tried first
usually quicker

Answer 3

Intensive Growth

Question 4

acquire related businesses

Answer 4

Integrative Growth

Question 5

acquire or build (attractive) non-related businesses
most risky

Answer 5

Diversification Growth

Question 6

Increase current products sold in current markets

Answer 6

Market Penetration

Question 7

1. promotion (traditional & digital advertising, social media posts, coupons)
2. adjusting price (usually down, sometimes up)
3. attracting competitors’ customers
4. enhancing brand personality → build brand equity / loyalty
5. improving quality to encourage repeat purchase

Answer 7

Strategies for Market Penetration

Question 8

“any and all usage of products whether or not the products are actually ‘consumed’ away, i.e. depleted.”

Answer 8

Consumption

Question 9

 When consumed?
 Where consumed?
 How consumed?
 How often consumed?
 How much consumed at once?

Companies consider these
questions when designing
strategies to encourage greater
consumption

Answer 9

Amount consumed → questions for companies to consider

Question 10

Discovering – and highlighting – broader and different uses for your product

Therefore altering:
* how and how much your customers consume (of) the product

Answer 10

Encourage Alternate Categorizations

Question 11

Consumers are increasingly thinking
about what – and how much – they
consume, especially Gen Z

Answer 11

Conscious Consumption

Question 12

New markets for current products

Answer 12

Market-Development

Question 13

1. Targeting different customer segments (expand beyond current segments)
2. New distribution channels
3. New geographic regions
   New regions of the country
   Foreign markets

Answer 13

Ways to achieve market-development

Question 14

B2C —> B2B

Answer 14

Targeting different customer

Question 15

 add online sales
 add sales on social media, e.g. Instagram
 add new retail locations
 Example: First Magnitude: started with sales at the brewery →
 on-premise sales at bars (World of Beer)
 Publix

Answer 15

New distribution channels

Question 16

 Abroad
 Or at home…

Answer 16

New geographic markets

Question 17

new products / new product lines for current markets
Leverage existing brand reputation & customer loyalty → evolving needs / trends

Answer 17

Product-development strategy

Question 18

Sometimes Intensive Growth is not enough →

Answer 18

Integrative growth

Question 19

buy similar, related companies operating at the same level of the supply chain

Answer 19

Horizontal integration

Question 20

-Purchase 1 or more suppliers (i.e. go backwards in the supply chain)
-Gain control of supply and costs

Answer 20

Vertical Integration: Backward Integration

Question 21

Purchase distributors or retailers “ahead” of you in the supply chain

Answer 21

Vertical Integration: Forward Integration

Question 22

The company:
* enters into a new, unrelated industry OR
* enters a brand-new market with a new product OR
* buys a company in a new, unrelated industry
i.e. ventures into unchartered waters → riskiest strategy…

Answer 22

Diversification growth

Question 23

1. Intensive & Integrative growth don’t deliver the desired sales growth AND
2. Good opportunities exist outside the present businesses AND
3. The company has the right mix of business strengths to succeed in the
   new category and new market

Answer 23

Diversification growth makes sense when

Question 24

companies often pursue many
growth strategies simultaneously…

Answer 24

Multiple growth strategies

Question 25

how a growth strategy is categorized depends on the company’s _______ position.

Answer 25

Current