Growth Strategies for Businesses

Podcast

Play an AI-generated podcast conversation about this lesson

Questions and Answers

What is required for growth to be successful when selling previously unpurchased products/services to existing customers?

Customers must only buy the cheapest options available.

Customers must decrease their usage of currently purchased products.

Customers must increase their product variety. (correct)

Customers must reduce their overall spending.

What distinguishes a market development strategy from a share-building strategy?

Market development involves reducing prices to gain customers.

Share building attracts new customers from competitors. (correct)

Market development focuses on increasing sales within existing customers.

Share building requires developing new product lines.

Which of the following is NOT a method for increasing profits from current customers?

Broadening the product range purchased.

Upselling to more expensive products.

Reducing marketing efforts towards current customers. (correct)

Increasing the frequency of purchases.

What may be required for businesses pursuing growth through new product development?

Product/service research and development capabilities. Signup and view all the answers

What is typically the primary approach to gaining new customers from your current market?

Running promotional campaigns to attract competitors' customers. Signup and view all the answers

What can businesses do to broaden their customer base?

Introduce complementary products to their existing offerings. Signup and view all the answers

Which strategy focuses on educating potential customers about product benefits?

Market development strategy. Signup and view all the answers

What is a key aspect of selling new products to existing customers?

Conducting thorough market research and product launch strategies. Signup and view all the answers

What is a primary characteristic of entering completely new markets with new products and services?

Applying unique capabilities in different industries. Signup and view all the answers

Which strategy involves searching for new markets for existing products or services?

Market expansion strategy. Signup and view all the answers

What factor often contributes to businesses successfully entering new markets?

Developing new distribution or sales channels. Signup and view all the answers

Why might a business choose to enter a new market on its own rather than through partnership?

To retain complete control over the new venture. Signup and view all the answers

How did IKEA initially perform in the U.S. market during its first year after expansion?

Surpassed expectations with $50 million in sales. Signup and view all the answers

What differentiates the growth strategy of developing and selling new products from that of market expansion?

Market expansion focuses on utilizing existing offerings. Signup and view all the answers

What is a key reason a business might choose to venture into new markets using new products?

To exploit unique strengths in existing capabilities. Signup and view all the answers

What risk is inherent in the approach of developing and selling new products in unfamiliar markets?

The challenges of establishing a new product fit. Signup and view all the answers

What is a primary function of Artificial Intelligence in business applications?

Performing tasks that require human-like intelligence Signup and view all the answers

How has McDonald's utilized Artificial Intelligence to improve its operations?

By modifying digital menus based on various factors Signup and view all the answers

What percentage of leading companies expect AI to significantly innovate their businesses in the next three to five years?

30% Signup and view all the answers

What is the main challenge faced by many businesses in developing AI applications?

Building internal capabilities to support AI development Signup and view all the answers

What role does Machine Learning play in the field of Artificial Intelligence?

Providing systems the ability to learn without programming Signup and view all the answers

What distinguishes Technology Platforms in business?

Providing a foundation for the development of other offerings Signup and view all the answers

What percentage of sales do nearly half of the leading users of AI attribute to AI-generated outcomes?

16% Signup and view all the answers

What industry practice has been noted among over half of the leading innovative companies regarding AI development?

Using external vendors to assist with AI projects Signup and view all the answers

What advantage does digital marketing provide to traditional businesses that allows them to compete more effectively?

Expansion of business with minimal incremental cost Signup and view all the answers

How has Zillow changed the real estate industry for consumers?

By providing access to historical real estate data online Signup and view all the answers

What is a key benefit for real estate agents using Zillow?

They can provide better service by using less paper Signup and view all the answers

Which statement best describes the relationship between Zillow and physical real estate businesses?

Zillow enhances customer access to information while benefiting agents Signup and view all the answers

What aspect of customer service is improved for real estate agents using Zillow?

Agents can spend more time on pricing and home presentation advice Signup and view all the answers

Which of the following is NOT an advantage of merging physical and digital marketing channels?

Increased competition among companies Signup and view all the answers

What capability do companies leveraging digital marketing typically possess that aids their market strategy?

Access to large volumes of customer data for targeted marketing Signup and view all the answers

What technological element does Zillow provide to enhance the house-buying experience?

Virtual reality tours of homes Signup and view all the answers

Which of the following best describes how ecosystems contribute to the development of new technologies, products, and services?

By enabling multiple organizations to collaboratively collect data, reducing costs and time. Signup and view all the answers

What is a significant advantage of organizations sharing Intellectual Property (IP) within collaborative ecosystems?

It accelerates the development of new technologies to benefit all collaborating entities. Signup and view all the answers

How does merging physical and digital marketing channels enhance value creation in ecosystems?

By overcoming the limitations of purely digital marketing near monopolies. Signup and view all the answers

In the context of technology platforms (TPs), which example demonstrates a service-based platform effectively?

NETFLIX enabling access to various video content through the internet. Signup and view all the answers

What role does the Cloud play in technological ecosystems according to the examples given?

It acts as a technology-enabled platform for businesses and consumers to store data. Signup and view all the answers

Which statement accurately reflects the advantages of leveraging existing technology platforms?

It allows organizations to innovate faster by utilizing established capabilities. Signup and view all the answers

Which of the following is NOT a benefit mentioned in the context of collaborative ecosystems?

Enhanced control over proprietary applications of data. Signup and view all the answers

What is an example of a technology platform that enables easy accessibility to indexed information?

Google's algorithm-based search engine helping locate information. Signup and view all the answers

Study Notes

Growth Strategies for Existing Customers

Companies can grow by increasing sales to existing customers.
To increase profits from existing customers, companies can:
- Increase usage of current products
- Purchase more types of products, without reducing purchases of their preferred products
- Purchase more expensive versions of products/services

Gaining New Customers

Gaining new customers while retaining existing customers is called a “share-building” or “market development” strategy.
“Share building” involves attracting customers who previously bought from competitors. This often uses sales and promotional programs.
“Market development” involves targeting customers who have not purchased similar products in the past. This often uses advertising, promotions, and informational programs.

Selling New Products and Services

Companies can grow by offering new products and services to existing and new customers.
Companies can develop new products internally through research and development, or license or acquire products from third parties.
This strategy often requires investing in:
- Product research and development
- Production and distribution development
- New product/service launch and promotion activities
- Legal and regulatory capabilities, such as patent, trademark, and liability protection

Selling Existing Products into New Markets

This strategy involves finding new uses for existing products and expanding into new markets.
This may require developing new distribution channels, or joint ventures with established businesses in new markets.
It can also involve geographic expansion into previously unserved regions.

Entering New Markets with New Products and Services

Companies can identify unique internal capabilities that can be applied to new industries.
This strategy can involve acquiring businesses in new markets, joint ventures, or developing new businesses from scratch.

Emerging Growth Drivers

Artificial Intelligence (AI) is increasingly being used by businesses to improve processes and increase sales.
Machine Learning (ML) is an application of AI used to automate learning and improvement from experience.
30% of leading companies anticipate a high impact from AI in the next 3-5 years.
While many businesses focus on using AI for internal improvements, a significant number are using it to generate sales.
Many businesses rely on external vendors to build internal AI capabilities.

Technology Platforms (TPs)

TPs provide a foundation for businesses to develop new offerings.
Examples of TPs include:
- Computing: Operating systems
- Technology: Cloud storage services
- Services: Streaming services
- Content: Search engines
- Marketplaces: Online marketplaces
Companies leveraging existing technology platforms can accelerate innovation by capitalizing on their capabilities.

Collaborative Ecosystems

Ecosystems involve multiple organizations collaborating on developing new technologies, products and services.
Benefits of collaborative ecosystems include:
- Sharing data collection efforts and costs, particularly when data is not a competitive advantage.
- Sharing intellectual property (IP) to accelerate development.
- Merging physical and digital marketing channels, as in the example of Zillow.

Zillow Ecosystem Example

Zillow provides online access to real estate data, previously only available to licensed agents through the MLS.
This benefits consumers by providing access to detailed listings and virtual tours, while benefiting agents by reducing their time and effort.
The merging of physical and digital channels creates a more efficient experience for consumers.

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Description

Explore various strategies for growth in business, including methods to increase sales to existing customers, attract new customers, and innovate through new products and services. This quiz covers concepts like market development and share-building strategies, enhancing your understanding of customer relationships.