What should the pricing strategy be in the growth phase?
When the market enters the growth phase, the rules of the game begin to change. In this stage, it’s no longer just about educating customers, as in the introduction phase. Now, with a larger number of active buyers and growing awareness of the various alternatives available, customers begin to be more price-sensitive.
MARKET LIFE CYCLEGROWTHCOMPETITIVE STRATEGY
Although they still don’t reach the level of sensitivity seen in the maturity or decline phases, purchase decisions begin to take price differences between competitors more seriously. In this context, a company may increase its sales in absolute terms yet lose market share if its pricing strategy is not appropriate. This happens because, during this phase, the market continues to expand and there is room for many firms to grow.
A key moment to define the competitive strategy
The growth phase is the last major opportunity a company has to clearly define its competitive strategy. It is even valid to reconsider the strategy adopted in the introduction phase if it becomes evident that it is not supported by a sustainable competitive advantage.
A company that initially opted for differentiation may find itself at a disadvantage if other competitors manage to offer better-differentiated solutions. In such cases, a viable alternative can be to focus on a niche of the market where it can still maintain an advantage.
A good example of this kind of strategic adjustment is BlackBerry. The company was a leader in the smartphone industry in the early years of market growth, reaching its sales peak in 2011. Although it initially competed with a differentiation strategy, the arrival of more advanced phones with Android and iOS operating systems reduced its competitive edge. BlackBerry responded by focusing on a niche: enterprise security. Today, although its presence in the smartphone market is minimal, it has found profitability as a cybersecurity software provider.
How to choose a sustainable competitive strategy
During this growth stage, it is essential to reconfirm how the company intends to compete in the market. Firms must be clear about the source of their competitive advantage and whether it aligns with the characteristics of the market.
Those who wish to compete with a cost-leadership strategy must have real sources of cost advantage, such as economies of scale, learning curves, or access to lower-priced resources. They must also verify that there is a significant proportion of highly price-sensitive customers.
Companies seeking to compete through differentiation need sustainable superiority in innovation, marketing, or service. They must also ensure there are enough customers who value those differences to justify higher prices.
Finally, those who choose a niche strategy must thoroughly understand their target segment and have the flexibility to adapt to its needs better than anyone else. Depending on the focus, this strategy may target customers seeking low prices, differentiated attributes, or specific availability.