7 Types of Business Strategies for Business Owners

Business strategy is a course of action that an entity adopts to grow and prosper. In layman’s terms, they are specific plans that outline the path that the business will take to gain a competitive advantage and capture a larger market share. These plans are developed by business experts who have profound analytical and planning skillsets and understand the dynamics of the market.

Business strategies prove helpful for every aspect of the organisation, ranging from marketing and operations to recruitment, sales and distribution. These plans are flexible in nature and can accommodate changes in the economic conditions and internal operations to keep the sales momentum going. Every strategy development involves thorough research, and its implementation requires a proactive team of workers and a competent leader.

Seven growth strategies have been identified as the most prominent ones that can make a business successful. Besides these, the organisation must have the required systems and resources to help execute the plan and a work culture that absorbs the plan effectively. So, here is everything you must know about them as an aspiring entrepreneur looking for a business for sale in Sydney or as an established business owner who plans to expand.

1. Product Differentiation Strategy

The uniqueness of the products and services is what makes them attractive to customers. Without any differentiation, it can be challenging to carve a niche in the cluttered marketplace that is flooded with similar products. To stand out in the crowd, it is necessary to become different and offer something valuable that others do not. The differentiation can be a part of anything ranging from customer service to packaging and after-sale service.

For example, Nike has positioned itself as a manufacturer of high-quality products that are considered the gold standard in athletic wear. Although there are several big competitors like Adidas, Puma, Reebok, etc., it has maintained its position through innovation in business.

2. Market Penetration Strategy

The market penetration strategy works to increase sales in the current market segment without making any changes to the products or services. It is the easiest way of boosting profits without spending too much in return. Thus, it is commonly used by small businesses that run on a tight budget and helps them to increase their market share.

To ensure the plan is executed without challenges, businesses need to increase production and distribution. The techniques business owners use to achieve this feat include offering discounts or lowering the prices compared to the competitors. The pricing tactic helps to find new buyers and the existing customers are coaxed into buying more products through loyalty programs.

3. New Product/Feature Strategy

Product expansion is a time-tested strategy of entrepreneurs that helps them to acquire new customers in the geographical territory. With the launch of a new product or innovative features in the existing range, the business can develop a competitive edge for increased sales. It proves highly successful in times of a technological advancement when the existing products can become obsolete.

For example, when smartphones started coming with high storage and digital music libraries, the MP3 players became redundant. Thus, the tech giant Apple continued its innovation and replaced its revolutionary iPod with iPhone in 2009. They had foreseen the future of music consumption and the power of smartphones and offered Apple Music on their mobile phones to stay relevant in the market.

4. Market Segmentation Strategy

Most business owners conduct market research to identify customer behaviour and satisfaction levels. During this survey, they can define the demographics of the market and identify the segments that are using their products or are interested in their offerings. Thus, they can segment the market into various sections based on their age group or occupation and then cater to them according to their needs.

For example, a business selling softening cream for hands was targeting women between the ages of 30 and 60 years, but during the research, they found that girls in the age group of 18 to 30 were also interested in the product. Thus, they found a new segment in the market to increase their sales.

5. Price Skimming Strategy

The price skimming strategy is adopted by businesses that are entering the market with a new product and placing it in the premium category. The high price tag of the product helps them to recover the cost of production, distribution, and marketing in the introduction stage of the business lifecycle. Since the business must spend a lot more in the nascent stage to create awareness and build a customer base, this strategy helps in maintaining the business cash flow.

However, the business owner must know that they can charge a premium only when they are offering a high-quality and unique product. Customers will pay the high price only when they believe that they are getting an extraordinary product.

6. Alternative Channels Strategy

As the name suggests, this strategy involves using alternative methods to reach the target audience. For example, they can sell through other retailers like Woolworths and Coles. Also, the advent of e-commerce platforms has allowed physical businesses to expand their market and reach new customers online. It helps them to connect with buyers at any time and from anywhere, which aids in expansion and higher sales.

If the business owner does not want to spend on creating an e-commerce website, they can also sell through eBay, Gumtree, Amazon, etc. It requires no spending on setting up a shipping channel and still makes higher profits. The business owner can also use paid search ads to increase sales.

7. Acquisition Strategy

Many businesses take the path of acquiring another business to grow. It allows the businesses to merge their talent, resources, stock, and policies to create a cohesive organisation that becomes more powerful, productive, and prominent. It can be a challenging process to complete the legal and financial formalities involved in the acquisition. Thus, businesses should weigh the option thoroughly before buying a business for sale in Sydney.

The acquisition strategy allows a small business to expand quickly with a diversified product line and wider customer base. They should have the required funds to acquire the business to make this strategy successful.

Conclusion

Growth is the most significant need of a business, and it can be achieved through a variety of strategies. If you are planning to expand your venture, you can utilise any of these approaches mentioned above to make your presence felt in the market.