Product Diversification: Definition, Goals, Examples and Types
Posted: Tue Dec 03, 2024 4:02 am
Product diversification is one of the efforts that can be done by business people to expand and develop their business. This strategy can be used by companies to reduce the risk of loss and expand the market. But before that, of course you need to understand the concept of diversification.
This discussion will review in more depth the concept of product diversification in business and what are the strategies. Check out the full details below, okay!
Understanding Product Diversification
When discussing the concept of product diversification, the email list first thing we need to understand is its meaning. Basically, the meaning of product diversification is a strategy for expanding existing products in a company. This strategy is carried out by creating new products and expanding them so that they can reach more consumers.
Product diversification is the process of expanding a company's product line by introducing new products in the same category. Diversification is often done to offer a wider range of products to customers, as well as to increase the company's revenue and profits.
But you also need to know that diversification is not only limited to the same product line or category. A company can create a new product that is different from the previous products. But the goal remains the same, which is to reach more potential consumers.
Product Diversification Examples
Understanding the concept of product diversification will be easier if we review it with existing examples. One example of product diversification is an instant noodle brand that often releases new products. You must often find new variants of your favorite instant noodle brand , right?
Instant noodle variants that were previously only chicken and soto flavors, for example, have been added with new flavors. Such as the taste of typical Indonesian food, namely rendang, or trending foods such as geprek chicken and seblak.
In addition to instant noodle products, you can also find examples of product diversification in other brands . Such as toothpaste , milk, shoes, bags, and many more. This shows that diversification is indeed a fairly effective strategy for business development.
Product Diversification Objectives
After understanding the definition and examples of product diversification, next we will review what the purpose of implementing product diversification is. Of course, the purpose of implementing a strategy can be different for each brand or company. However, there are still general goals that are the reason why a company diversifies.
Here are some important goals of implementing product diversification for business:
1. Increase Sales and Profit Figures
The first, and arguably the main, goal in implementing product diversification is to increase sales and profits. With product diversification, it is expected that more consumers will buy products from the same brand. So consumers do not need to meet their needs from other brands, because there are already products from brands they already use.
2. Adapting Products to Audiences
The next goal of product diversification is to adjust to the needs of the audience. For example, a brand initially only produces milk for toddlers and children. However, after conducting research, it turns out that teenagers also need milk for growth. So to meet the needs of the teenage audience, the brand also makes milk for their segmentation.
3. Providing New Innovations for Consumers
The next goal of product diversification is to provide new and fresh innovations for consumers. That way, consumers will not get bored easily and are expected to remain loyal to existing brands. If you only present the same products without updates, it is not impossible that consumers will switch to other brands.
This discussion will review in more depth the concept of product diversification in business and what are the strategies. Check out the full details below, okay!
Understanding Product Diversification
When discussing the concept of product diversification, the email list first thing we need to understand is its meaning. Basically, the meaning of product diversification is a strategy for expanding existing products in a company. This strategy is carried out by creating new products and expanding them so that they can reach more consumers.
Product diversification is the process of expanding a company's product line by introducing new products in the same category. Diversification is often done to offer a wider range of products to customers, as well as to increase the company's revenue and profits.
But you also need to know that diversification is not only limited to the same product line or category. A company can create a new product that is different from the previous products. But the goal remains the same, which is to reach more potential consumers.
Product Diversification Examples
Understanding the concept of product diversification will be easier if we review it with existing examples. One example of product diversification is an instant noodle brand that often releases new products. You must often find new variants of your favorite instant noodle brand , right?
Instant noodle variants that were previously only chicken and soto flavors, for example, have been added with new flavors. Such as the taste of typical Indonesian food, namely rendang, or trending foods such as geprek chicken and seblak.
In addition to instant noodle products, you can also find examples of product diversification in other brands . Such as toothpaste , milk, shoes, bags, and many more. This shows that diversification is indeed a fairly effective strategy for business development.
Product Diversification Objectives
After understanding the definition and examples of product diversification, next we will review what the purpose of implementing product diversification is. Of course, the purpose of implementing a strategy can be different for each brand or company. However, there are still general goals that are the reason why a company diversifies.
Here are some important goals of implementing product diversification for business:
1. Increase Sales and Profit Figures
The first, and arguably the main, goal in implementing product diversification is to increase sales and profits. With product diversification, it is expected that more consumers will buy products from the same brand. So consumers do not need to meet their needs from other brands, because there are already products from brands they already use.
2. Adapting Products to Audiences
The next goal of product diversification is to adjust to the needs of the audience. For example, a brand initially only produces milk for toddlers and children. However, after conducting research, it turns out that teenagers also need milk for growth. So to meet the needs of the teenage audience, the brand also makes milk for their segmentation.
3. Providing New Innovations for Consumers
The next goal of product diversification is to provide new and fresh innovations for consumers. That way, consumers will not get bored easily and are expected to remain loyal to existing brands. If you only present the same products without updates, it is not impossible that consumers will switch to other brands.