The Concept of Growth in Marketing

What exactly do we mean by marketing growth? What indicators are considered to achieve growth? In a traditional organization, growth means increasing sales or profitability. Of course, this view is largely correct, and without a doubt, the most important growth factor is these two factors. But sometimes, the long-term view requires us to consider other indicators as well. Personally, if an organization asks me about growth, the first thing that comes to my mind; is “increasing the number of customers” even if it has increased marketing costs and reduced the organization’s short-term profits (although this depends entirely on the organizational situation).

Another important point is that we should not equate growth with financial performance. The financial performance focuses on concepts such as reducing costs and increasing revenue, while growth strategies in organizations focus mainly on ways to achieve this goal. Usually, when we talk about growth in marketing, the minds of marketing managers are less involved in issues such as improving processes, reducing running costs, saving resources, and so on. They mainly think of new ways to reach more customers and improve sales, which can usually be achieved in the following ways:

  1. Increasing the number of customers in the current markets (which can be achieved through the development of product portfolio; improving product mix; better distribution and more accessibility; price changes; increasing advertising, etc.) that usually improves market share (on Customer quantity basis)
  2. Increasing the purchase volume of current customers (which can be achieved through incentive schemes, price changes, discounts, etc.) and usually leads to improving market share based on customer quality
  3. Entering new geographical and export
  4. Launch and development of new products
  5. Vertical growth and development of production infrastructure of current products (for example, through the purchase or operation of units related to the supply of raw materials and semi-finished goods for current products)
  6. Eliminate or weaken competitors: For many companies, taking actions that lead to weakening the position of competitors is an indicator of organizational growth because it allows for higher sales in the medium term.
  7. Improving the profit margin of product sales, which can be achieved mainly by improving the brand performance indicators. In this case, although the number of customers usually decreases, the profitability of the organization will increase

What matters, and is usually overlooked, is that before growth can take place; A growth strategy must be developed. For example, a growth strategy in an organization may be based on cost reduction and, as a result, final price reduction, and may seek to increase the number of customers by reducing the final product price. First, the choice of this strategy must be based on the advantages and potential of the organization. For example, if the company is dependent on imports of main raw materials from abroad; Probably should not go for this strategy. Secondly, if this strategy is chosen and accepted, indicators to achieve growth are usually anticipated that are in line with the macro strategy. For example, vertical development (and supply chain completion) and efforts to produce raw materials by the company itself may be good strategy to be proposed by the marketing unit. In this way, one can expect to achieve a more competitive price in the medium or long term, and thus gain more market share. Regarding this strategy, it has already been evaluated whether the reduction of the final price will necessarily lead to an increase in the number of customers or not. Before choosing this strategy, market research managers must have evaluated the accuracy of this issue. In general, the following principles can be presented as a conclusion in this section:

  • Growth indicators are different for each organization and should be explained according to the potential and strategy of the organization.
  • A long-term view of growth is very important. Growth in the medium and long term may come at the cost of losing profitability in the short term.
  • Increasing the number of products does not necessarily mean improving growth. In some cases, reducing the number of products and removing some SKUs may lead to increased sales
  • Although improving profitability can be considered the most important indicator of growth, especially in the short term; indicators such as increasing the number of customers and increasing market share; In many cases, take precedence over the profitability index, even if they do not lead to increased profitability
  • Growth measures and policies in the organization should be consistent and coherent and based on the macro growth strategy
  • The launch of new products, even if they have high sales, does not necessarily mean growth. This is because the growth of new product sales may have prevented the sale of previous products.
  • Reducing the final price of a product does not necessarily mean more sales and higher profitability

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