The growth of any brand will plateau if it is successful with its initial product range in its region of origin. Further growth must come from expanding the product range, extending geographically, or both. Before scaling your brand, the business fundamentals need to be in place. Investors seem keen to fund technology-based brands even if they have never made a profit, but this isn’t wise. According to Cyrine Ben-Hafaïedh and Anaïs Hamelin (2022), profit-focused brands are better set for future growth. By contrast, unprofitable, growth-focused brands have a comparatively smaller chance of making a long-term profit.
As brands grow, they may enjoy efficiencies of scale or be able to leverage their growing consumer base. However, these benefits often reflect wishful thinking rather than sound business analysis.
If your brand is profitable, the Enhanced Ansoff Matrix (Johannesson 2009) illustrates the complex choices you’ll need to make when considering your next step for driving growth. The matrix highlights nine possible growth strategies. You could continue selling your existing product(s), introduce enhanced or modified version(s), or develop completely new products. You could also decide to focus on your current audience, expand to new markets, or target different types of consumers.
The personal care brand Dove was launched in 1957. During its early years, the brand focused on building penetration of its cleansing bar in a few key markets, targeting women (market penetration). The advertising explained that Dove’s cleansing bar contained moisturizer and was pH neutral, so it cared for the skin (unlike traditional soap). Over the next 38 years, Dove launched its cleansing bar in new markets across the world (market expansion). It wasn’t until 1995 that Dove started to launch products in other product areas, still targeting women (product development). This started with adjacent categories, such as shower gel and shampoo. In 2010, Dove launched Dove Men + Care. In 2017, it introduced Baby Dove. These new ranges mainly comprised modified versions of existing Dove products (partial diversification).
As of 2022, Dove sells more than 150 products and operates in more the 150 countries across the world. The brand has been successful because:
- It has built strong associations with skincare over time
- It launched new products and targeted new consumer types after establishing high levels of familiarity and trust
- Its products are consistently high quality and deliver against the brand’s skincare promise
Deciding which strategy is right for your brand is complicated. Whether to expand to new markets, for example, depends on the size of the opportunity compared to the investment required. The costs of transportation, retail distribution, advertising, and legal matters all need to be considered. You may need to produce modified versions of your product to succeed in new contexts. Even Coca-Cola varies its formula to reflect regional taste preferences.
Growth planning also requires an understanding of how consumers’ needs and priorities are likely to evolve. Google Trends allows brand managers to identify trends that will have an impact on category growth and the fortunes of their brand. For example, the cleaning product manufacturer Method identified an opportunity for a brand that is less harmful to the environment and looks great in the kitchen, based on consumer feedback.
Contributed to Branding Strategy Insider by: Dan White, author of The Soft Skills Book, The Smart Marketing Book and The Smart Branding Book
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