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FEATURE BUSINESS SERIES

Achieving growth

In the fourth article in this series of five, the focus is on business growth. Generally seen as the second stage in the business life cycle - the speed and strength of growth of a business will determine whether or not the business survives to maturity.

T

he growth stage is the

information to make the necessary

during this phase and having a lazy

fall back to immature approaches,

second stage in the

changes to continue the upward

approach to innovation will limit the

thinking and processes and

business life cycle, and

trajectory of their business. The

retailer in future stages.

should continuously challenge

for many retailers, this is

following are some of the benefits

themselves with new mind-sets,

the key stage for establishing their

that a business can experience

Falling back on immature mind-sets

approaches and processes. Being

position in the market, increasing

during the growth stage of the

It is of critical importance that

open to utilising business intelligence,

sales and improving profit margins.

business life cycle:

while maturing, during the

technology and partnerships will

growth phase, retailers do not

become of critical importance.

This is achieved by the continued development of consumer demand

Costs are reduced

through the use of marketing and

With new product development

promotional activity, combined

and marketing, the introduction

with the reduction of operational/

stage is usually the costliest

manufacturing costs. How soon

phase of a product’s life cycle. In

a business moves from the

contrast, the growth stage can be

introduction stage to the growth

the most profitable part of the

stage, and how rapidly sales increase,

whole cycle for retailers. As sales

can vary substantially from one

increase to meet demand, retailers

market to another.

are able to reduce their costs

Generally, the growth stage in the

through economies of scale, and

retail sector tends to take place very

established routes to market also

rapidly as news of their products

become a lot more efficient.

and services spread via different marketing channels. However, this is

Greater consumer awareness

also the stage where most retailers

During the growth phase, more and

fail, due to the following challenges:

more consumers will become aware of the new business. This means

INCREASING COMPETITION

that the size of the market will

When a company is the first one

start to increase, and there will be

to introduce a product into the

a greater demand for the product;

market, they have the benefit of

all of which leads to the relatively

little or no competition. However,

sharp increase in sales that is

when the demand for their product

characteristic of this stage.

starts to increase, and the company moves into the growth phase of the

Increase in profits

product life cycle, they are likely to

With lower costs and a significant

face increased competition as new

increase in sales, most retailers will

manufacturers look to benefit from a

see an increase in profits during

new, developing market.

the growth stage, both in terms of the overall amount of profit they

LOWER PRICES

make and the profit margin on each

During the Introduction stage,

product they sell.

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Screw the plug into the drywall plug using a large Phillips bit or screwdriver

companies can very often charge early adopters a premium price

THE PITFALLS

for a new product. However, in

However, notwithstanding the

response to the growing number of

potential benefits there are certain

competitors that are likely to enter

pitfalls that retailers should be aware

the market during the growth phase,

of during this stage:

Step 2:

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retailers may have to lower their prices in order to achieve the desired

Continuous Innovation

increase in sales.

Although it may be the growth stage, it is of critical importance

BENEFITS OF GROWTH

that during this phase, which is

Luckily, the growth stage can also be

before the next phase (ie ‘mature’

the most beneficial stage to a growing

phase) that new and continuous

retailer. At this stage, the business

innovation is introduced. Not

has the time and market-related

utilising the momentum created

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DIY & INDUSTRIAL TRADE NEWS MAY 2019

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DIY and Industrial Trade News - May 2019