Modern Strategic Moves Can Fast-Track or Re-invent Business Growth Cycles

If you ask any sales professional, he/she will indicate that price is the main challenge to meeting desired sales  levels. In fact, many of them recommend  price reduction as an attempt to  increase sales.  But, one American company conducted a survey sometime ago, aiming to verify the assertions of the sales team. Interestingly, 94 % of the buyers of the company products were influenced by other factors that were unrelated to the price.

Nonetheless, one of the most popular business growth strategies is the low cost strategy. It is also referred to as low price strategy. A company employing this pricing strategy offers a relatively low price, aiming to stimulate demand and gain market share or increased customer base. It is one of the three generic  growth strategies that can be universally adopted by any business organization.

The strategy is usually employed where the product has few or zero competitive advantages. Another alternative is where economies of scale are achievable with higher production volumes. A good example is in publishing. Production of say 100 books may cost almost the same as that of 1000 books, therefore preference of the higher quantity. The selling price of the 100 books becomes almost prohibitive compared to when the cost is spread out over 1000 books.

The low price strategy is very appropriate for homogenous commodities. They are so similar such that they are only differentiated by the price. This pricing strategy is quite common in supermarkets. The aim in this situation is to capitalize on quantity sales.

In a competitive business environment however, the market becomes saturated with homogenous commodities. This leads to perfect markets as economists will attest. The price becomes the key competitive factor for the largely similar items. Sadly, some players end up adopting the low price strategy, even when there may be no likelihood of quantity sales. Sometimes, the strategy is innocently employed, only for purposes of continued survival.  But, for how long can survival be sustained? Further, will continued price reduction not lead to selling at cost?

This selling at cost will mean recouping the stocking costs and therefore making no profits whatsoever. That may leave a business in desperate situations. It could be  unable to finance its own operational expenses, such as rent and wages.  Indeed, these may not be good signs for business continuity.

More still, there can be no business growth under such circumstances. In fact, such business is threatened with the incidence of going full cycle, whose last stages are decline and eventual closure. That poses danger and should never be allowed to happen. All efforts should be put in place to re-invent new cycles of growth and progress, at least before the decline stage.

The good news is that modern strategic moves can now be employed aiming to find and exploit business growth opportunities. It does not matter the industry, nature of or even size of the business. The same moves are also ideal for fast-tracking or-reinventing  the growth cycles.

However, these strategic moves are peculiar to each business and may only be dealt with on a case by case basis. At what stage of the cycle could your business be operating? What of the industry cycle? These and more are the kind of considerations that are prevalent while employing the said modern strategic moves.

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