When the business spreads across multiple market segments, it lowers the risk of business failure.
Diversification Strategy Guide | Resources | Get Lucidity
The challenges involved in market diversification are research and planning, advertising, marketing, and activities needed to sell a product to a new segment. In product diversification, managing and additional product development is a major challenge. Here we discuss its objectives, features, and risk along with examples, advantages, and disadvantages. You can learn more about from the following articles —. Free Investment Banking Course. Login details for this Free course will be emailed to you.
Diversification: Definition, Levels, Strategy, Risks, Examples
This website or its third-party tools use cookies, which are necessary to its functioning and required to achieve the purposes illustrated in the cookie policy. By closing this banner, scrolling this page, clicking a link or continuing to browse otherwise, you agree to our Privacy Policy. Focus on product diversification that represents an attractive opportunity for your business, such as an instance where the market is growing and no other company is meeting the demand.
Provided the costs of developing and marketing the new product allow you to earn a profit, this is an opportunity to pursue.
Risk increases if the new product might take sales away from your existing products or if the cost of market entry is very high. In those scenarios, the benefit to your company may not offset the risk.
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Before committing resources to product diversification, carry out research to ensure that you understand the needs of the market. Use the Internet to identify potential competitors and find out more about their products and prices. Carry out a small-scale market test to evaluate the potential of your strategy.
How to diversify your product line
Evaluate the results of your sales and marketing activities in the test. Analyze the cost of taking the product to market so you can prepare an accurate budget for launching the new product. Based in the United Kingdom, Ian Linton has been a professional writer since He holds a Bachelor of Arts in history and economics from Bristol University. By Ian Linton Updated January 28, Tip A product diversification strategy considers existing products for new pricing or expands new products into markets to leverage existing sales avenues or establish new ones.
Module 4: Marketing Strategy. Search for:. Diversification Example Learning Objectives Give some examples of corporate strategies.
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