There are many ways of growing a firm and therefore management must consider the optimal option which is in line with its major objectives. The main ways of enhancing sales include market concentration, innovation, penetration and diversification.
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This paper will focus on penetration as a growth strategy. For a retail store, it is possible that the local market is already saturated and it becomes necessary to expand to new market. It can be a risky strategy but also worthwhile.
Methods of market penetration
The main methods of penetrating to new markets include:
Export: Exporting can be defined as marketing of goods and services produced in one country into another country. For a retail store dealing with assorted commodities such as designer clothes, exporting overseas is a viable option. It is critical to do a thorough market research before exporting the products overseas.
The retail stores can immediately export its commodities abroad if it receives orders but it will find a promising market if it conducts a market research.
This increases chances of success in the foreign markets. The main advantages of conducting market research is that it can help firm in finding the best place of selling the products, identifying new and emerging trends, comprehending the needs of consumers, finding out new market segments, establishing suitable pricing model for the products, coming up of techniques of overcoming barriers to entry and discovering local and foreign rivals. A
fter conducting a research, it is safe to roll out plans of exporting the products overseas. The main benefit of exporting is that it boosts revenues and profits of the firm from foreign outlets. The main disadvantage is that foreign market can be unpredictable such that any instability, whether economic or political, can severely affect the operations of the stores.
Extra locations: opening up of new stores in other places within the country is another option. So as to minimize expansion expenses, new stores should be strategically stationed with the core and support functions centralized to the head office.
Advertising: Retail stores can conduct a serious and intense advertising campaign in the emerging markets. Television and newspaper adverts can be the most effective means of reaching potential customers. Internet can be used since it widely used by people. In this case, stores can set up a website where it promotes the various products.
One can use mass advertising when the intention is to open many stores. It is crucial to note that when expanding to new markets, people are not aware of the brand.
For mass advertising to be employed, critical number of stores must be established first so as to determine the cost of campaign. Use of catalogues can be effective in acquiring new customers. The firm simply band together with other rivals and produce combined catalogue.
Segmentation: using market survey to discover emerging segments that can utilize the stores. A new store can be opened in an up market place that is experiencing rapid real estate development. This is to cater for new customers who may have high disposable income.
Market penetration as a growth strategy can be fruitful or risky. Whether one chooses exporting, advertising, new locations and segmentation, it will all come down to which option has the least cost and has the most returns.