INCREMENTAL

GROWTH
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By: Lady Mae Calerio, Fatma Abubakar

 Entrepreneurs want to have an idea about how big
the demand could be for their product so that
they can plan how much to invest for their
operations, logistics, and working capital
requirements. But if the entrepreneur only has a
limited pool of capital to invest, then a practical
alternative will be to simply start small initially
and then build up capacity as needed.
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 The process can be outlined as follows:
1. Start small, producing small quantities of the product
at first.

2. Test the market's reaction and if the demand has

the potential to grow.

3. If a favorable market response is detected, scale

fast by immediately investing in additional production
capacity in incremental and manageable steps.
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 The advantage of the above strategy is that financial risks are
minimized since a failed product would mean minimal capital
exposure. The disadvantage, however, is that if the product
turns out to be a huge success, the firm may not be quick
enough to generate a capacity size that can maximize cost
advantages or, worse, the firm may be crippled by an innate
inability to satisfy demand (which is an opening for competitors
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to come in).
 In the end, regardless of what the forecasts
say, an effective marketing manager is
someone who manages demand proactively: if
plant capacity is too big, then the marketer's
job is to find ways to increase the demand for
the product.
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 Thank you for
Listening!
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