Marketing Strategies: Growth Stage
The growth stage is marked by a rapid climb in sales. Early adopters like the product, and additional consumers start buying it. New competitors enter, introducing new features and expanding distribution, and prices stabilize or fall slightly, depending on how fast demand increases. Companies maintain marketing expenditures or raise them slightly to meet competition, but sales rise much faster than marketing expenditures. Profits increase as marketing costs are spread over a larger volume, and unit manufacturing costs fall faster than price declines. Firms must watch for a change to a decelerating rate of growth in order to prepare new strategies.
To sustain rapid market share growth now, the firm must improve product quality, add new features, and improve styling; add new models and flanker products to protect the main product; enter new segments; increase distribution coverage and enter new channels; shift from awareness and trial communications to preference and loyalty communications; and cut price to attract price-conscious buyers. By spending money on product improvement, promotion, and distribution, the firm can capture a dominant position, trading off maximum current profit for high market share and the hope of greater profits in the next stage.