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Growth is the aspiration of nearly all companies. Shareholders look for it, CEOs hire for it and CMOs lead efforts to make it a financial reality. In a competitive marketplace, however, not all companies benefit from their growth initiatives. In the 27th Edition of The CMO Survey, 22% of companies reported negative growth, another 25% reported no growth, and only the remaining 53% reported positive growth. Those findings are deeply concerning in a market that favors transformation, speed and scale, and where digital savants and platform companies are experiencing soaring revenues and profitability at others’ expense.
Against this backdrop, what steps can marketers take to help their companies grow and thrive in the ultra-competitive digital marketplace?
Results from The CMO Survey point to two categories of activities that seem to make a difference: First, the strategies that marketing leaders design for growth and, second, the ways in which marketing leaders manage these growth initiatives internally.
How Marketing Leaders Design Strategic Growth Initiatives
1. Think Beyond Market Penetration
The bulk of companies’ growth strategy spending (55%) continues to be directed towards market penetration — selling more of existing products and services to existing customers. Market development (targeting new customers with existing offerings) is the third most prominent strategy in terms of growth spending (product/service development is a close second). However, market development has become a more significant priority across all sectors, increasing by almost 13% in the past six months. B2C-service companies increased their use of this strategy by 52% while B2C product companies increased by 28%. This growth strategy leverages investments in existing products and services to sell them to new customers, which is likely to have a positive impact on bottom lines.
2. Consider Organic Growth Alternatives
Some 72% of growth investments are directed toward organic growth activities. This strategy gives companies complete control, but also requires more resources. Partnerships, which are only used 12% of the time, may be worth a second look. Partnering with others that have the brand, customer or distribution resources companies lack may be a wise way to spread risk and gain access to valuable resources. At the same time, if a company has strong brands or other resources that can be licensed (an approach used only 4% of the time), this provides another way to grow revenues without making new investments.
3. Think Beyond the U.S.
Budgets and sales for domestic markets varied little from February 2021 and remain lower than pre-pandemic levels. Overall, companies are only spending 15% of their marketing budgets internationally. Larger companies, both in terms of revenue (25%) and number of employees (29%), allocate a greater share of their marketing budgets to target international markets. So do companies in education (34%), transportation (26%) and technology software platforms (23%). Notwithstanding this heterogeneity, we think more …….