What is a concentric diversification?

concentric diversification is one of several different diversification strategies that companies use to increase their attractiveness to consumers. With this particular approach, business will try to increase the market share by introducing a number of new products that are likely to attract the attention of existing clients, but also attract new customers. The aim is sometimes referred to as convergent diversification, motivating current customers to buy older products of the company and at the same time decide to buy newer products. At the same time, efforts also bring new clients who do not have a relationship with older products, based on the attraction of the recently launched product line.

with concentric diversification is not uncommon that newer products have some relation to the existing product line. For example, a company that has created a stable clientele for its paper boards may decide to add other product lines that can be used with plates. This may include a range of color koOrdinated disposable beverage cups, napkins and even plastic cutlery and disposable tablecloths. The aim is to lure customers who already buy plates to buy other goods that could be used simultaneously. This approach can also reach new customers who want to create a coordinated look when they enjoy occasional dining, such as an outdoor picnic.

In some cases, concentric diversification will include the opening of new markets by creating a variation on the product line that has already created a faithful clientele in a specific market sector. Using this approach, a company that currently offers commercial cleaning products used by professional cleaning services can decide to trigger a similar range of products that attract households. In some cases, branding for the new line can resemble an older Commercial Line, which allows you toPeople who already know and trust older products to try a newer line at home. Assuming that the new line provides an acceptable level of satisfaction, the manufacturer will expand its client base to a new market sector, thus effectively increasing its profit range and achieve the success of a concentric diversification effort.

The General Director of Concentrating Diversification can also easily convert to other settings. Regarding the diversification of the investment portfolio, the investor may decide to include a series or a group of shares issued by companies that operate on similar markets as the purchase of shares in the telephone company and also in the conference call office. This approach allows the investor to use similar revenues from both investments because there are some consumers who would use both types of telecommunications services.