What is the product diversification?

Product diversification is a process that businesses try to expand their market reach and customer base by supplying products somewhat different from those known for. These new products can easily be an extension of existing brands or can be completely new. The company can expand its business into new areas and markets, increasing their opportunities for profit. There are some potential pitfalls for this strategy, including the possibility that the company could stretch too thin or dilute its original brand of existence of new product lines. Removal of all focus from one area and its spread between many different areas is less relying on any area to be produced. Investors can use this strategy to try to expand their money and get new areas of exhibitions. Companies that sell products for the public may also need diversification, especially if they cannot maintainyour business with only one product or approach. For this reason, product diversification is often an effective business strategy.

There are several ways of society can achieve product diversification. It does not necessarily have to be with a brand new product, although it is one way to achieve diversity. A specific brand can be naturally expanded. For example, a company that sells Cola may decide to release a number of Diet Colas based on their original formula, but with a smaller number of calories than the original product.

In this example, Cola will inhabit a new market for those people who are aware of their weight. This is an example of what the product diversification can do. It can expand the audience for a specific brand and can improve the overall lower line c. Ideally, new products or brand extensions can work as an accessory for the original brand, so customers who are familiar with the original brand could also have used for new choices.

It is important that the leaders of the enterprises realize that there are certain disadvantages associated with product diversification. Too many extensions can eventually dilute the original brand and confuse the customers that the company is trying to achieve. In the worst case, it can even deter customers from the original brand. Entrepreneurship that is familiar with the fact that one type of product may come across if they are not familiar with the new market and its customer base.