product diversification is a business strategy which involves producing and selling a new line of products or product division, service or service division which involve either same or entirely different sets of knowledge, skills, machinery, etc. product diversification can occur at various business levels or at the corporate level. it is a part of product line decisions and may occur either at a horizontal or vertical level of business. some very famous stories of product diversification are that of general electric, disney, tata group. similarly, walt disney company diversified its business from being an animation industry to an amusement park film production and television industry.
market diversification means extending of business offering to a new market that has not been previously targeted, whereas product diversification is the addition of new services and products to an existing business for its expansion within existing markets. market diversification is often done to challenge a competitor and to find additional sources of income. the challenges involved in market diversification are research and planning, advertising, marketing, and activities needed to sell a product to a new segment. this has been a guide to what is product diversification & its meaning. cfa® and chartered financial analyst® are registered trademarks owned by cfa institute.return to top
take the time to understand how to effectively plan, organize and execute a new product diversification strategy. you can take a defensive approach with the objective to protect your business if, for example, demand drops for your products or you face strong competition. alternatively, you can take an offensive approach where you see a strong market opportunity but can’t take advantage of it with your existing products. you can modify your existing products so that the new version appeals to a different group of customers. another approach is to add a new product to your range, aimed at a new group of customers. analyze whether you have the resources to develop new products or modify existing ones.
set a budget for the diversification program to cover development and marketing costs. consider the supply chain implications of your new products. does your team have the product and market knowledge to achieve your sales targets? 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. carry out a small-scale market test to evaluate the potential of your strategy. analyze the cost of taking the product to market so you can prepare an accurate budget for launching the new product.
product diversification is a business strategy which involves producing and selling a new line of products or a product diversification strategy is a form of business development. with the objective to protect your business if, for example, demand drops for your products or you face strong competition. disney’s product portfolio also includes marvel comics, television network abc, and cable sports channel espn. the, . for example, a household cleaning product could be repackaged and sold as a cleaning agent for automobiles. an existing product could be renamed, perhaps along with somewhat different packaging, and sold in a different country. what is product diversification? product diversification is a strategy employed by a company to increase profitability. they show how well a company utilizes its assets to produce profit and achieve higher sales volume from new products. diversification can occur at the business level or at the corporate level. diversification is a corporate strategy to enter into a new products or product lines, new services or new markets, involving substantially different skills, technology and knowledge.
concentric diversification occurs when a company enters a new market with a new product that is teen people was an example of product diversification since it was a new product that expanded the market potential of for example, bic is said to follow a related- constrained diversification, as all of its products (razors, cigarette,
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