Considerations When choosing diversification strategies, look at your current customer base to determine if you can sell them different items or if you can add new customers by selling them a similar product at a different price or under a different name.
Therefore, the company puts itself in a great uncertainty. The company could seek new products that have technological or marketing synergies with existing product lines appealing to a new group of customers. If done correctly, diversification provides a tremendous boost to brand image and company profitability.
Conglomerate company Goal of diversification[ edit ] According to Calori and Harvatopoulosthere are two dimensions of rationale for diversification. Risks Of the four strategies presented in the Ansoff matrix, Diversification has the highest level of risk and requires the most careful investigation.
He has worked in the corporate and nonprofit arenas as a C-Suite executive, serving on several nonprofit boards. In both cases, Avon is still at the retail stage of the production process. The company could seek new products that have technological or marketing synergies with existing product lines appealing to a new group of customers.
This combination is determined in function of available opportunities and consistency with the objectives and the resources of the company. Generally, the final strategy involves a combination of these options.
An alternative form of that Avon has also undertaken is selling its products by mail order e. There are three types of diversification techniques: Calculate the ongoing operating costs and stress on your administration of a diversification strategy and determine if you can support two different businesses or product lines.
Starting a business in a completely new area will often require more time and money, since you are starting from scratch.
Staying within your market lets you use your contacts, brand and customer base, such as a pet sitter offering grooming services. Horizontal diversification[ edit ] The company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current customers.
Generally, the final strategy involves a combination of these options.
As you continue your progression, these additional resources will be helpful: Going into an unknown market with an unfamiliar product offering means a lack of experience in the new skills and techniques required.Diversification (marketing strategy) Diversification is a corporate strategy to enter into a new market or industry which the business is not currently in, whilst also creating a new product for that new market.
Corporate strategy is the strategy a firm uses to compete across multiple businesses. Many small firms want to grow by entering new businesses.
Many large firms already are in multiple businesses, e.g. a photo camera producer selling also sunglasses. We developed this course to help you make good.
From Competitive Advantage to Corporate Strategy. with a high average return on investment will be difficult to enter because entry barriers are high, suppliers and buyers have only modest. Of the three types of diversification techniques, conglomerate diversification is the riskiest strategy.
Conglomerate diversification requires the company to enter a new market and sell products or services to a new consumer base.
To Diversify or Not To Diversify. diversification as a corporate strategy goes in and out of vogue on a regular basis. Kao had tried to enter a market with a strategic asset that didn’t. Before you begin planning a diversification strategy, write the reasons you are considering doing so.
relationships or a customer base that make it easy to enter a new market.Download