1273616, Rajat kumar, F2, Q-19 Profitability Growth

PROFITABLE GROWTH

Introduction:
                                   Profitable growth is the combination of profitability and growth, more precisely the combination of Economic Profitability and Growth of free cash flows. Profitable growth is aimed at seducing the financial community. Profitable Growth stresses that Profitability and Growth should be jointly achieved. Every organization tries to growth to achieve economies of scale and then profitability. Most growth investment will at first reduce the profitability; cost reduction efforts to boost the bottom line usually have a negative impact on future growth.
Discussion:
                               An organization overcomes this situation by making some strategies i.e.:

• Product line extension
• Product innovation
• Distribution Channels Expanding

Product Line Extension: A product line extension is the use of an established product’s brand name for a new item in the same product category. Line Extensions occur when a company introduces additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, package sizes. This is as opposed to brand extension which is a new product in a totally different product category. For example HUL have clinic plus, clear, dove and sunsilk, come under shampoo products for different type of customer.
Product Innovation: Product innovation is the creation and subsequent introduction of a good or service that is either new or improved on previous goods or services. Innovation includes invention of new products which, in this context, are still considered innovative. For example Iphone come up with new additional feature which give competitive advantage to new phone in market over others.
Distribution Channels Expanding: Every business, no matter how large or how small, wants to sell more of its existing products and services. In order to do so, businesses must expand their market reach to acquire additional customers. Increasing sales in existing markets through advertising and marketing strategies is certainly not to be overlooked; however, the most effective way to gain new customers is to create new distribution channels that reach untapped markets. This can be accomplished by such methods as:

• Adding retail locations (corporate and/or franchised)
• Establishing more production facilities
• Developing reseller relationships (wholesaler, dealer, consultant, etc.)
• Providing online sales opportunities

Conclusion:
                                 So the conclusion is profit and growth can be achieved by using these strategies. When company can evaluate or chance itself product and its distribution by introducing new product with new features, and exploring new market for expansion or growth of the product.