To conquer new markets and thus gain in performance and competitiveness, integrating the diversification of the business portfolio into the corporate strategy can prove to be an effective option. But before taking the decision to diversify products and services, it is important to define a strategy based on different elements.
What is diversification about?
First of all, it is important to clarify that diversifying is different from dispersing. To be more precise, to disperse is to develop something that has nothing to do with the company’s activity. Diversifying is developing while exploiting the company’s assets in a different way while remaining in the core business. For example, there is product diversification and service diversification, which means that the business creates or integrates new products and services with the objective of targeting new markets. These new products and services must be integrated vertically (selection of a subsidiary for cost reduction) or horizontally (introduction of new products that are different from current products, but which may be complementary). There is also conglomerate diversification, which means that the company offers products and services that are different from the current products.
Good reasons to opt for product and service diversification
By making the decision to develop a product and service diversification strategy, any company can effectively meet other customer needs while implementing an effective retention plan. Multiplying services and products means contributing to the company’s sustainability. Yes, if certain products are not profitable, the losses associated with these products can be offset by the profits from profitable products, i.e. products that have attracted customers. The objective is obviously to avoid all of them dying at once. It can therefore be said that the diversification of products and services is a real opportunity for companies that wish to develop so as to remain serene for several years. Expanding the portfolio of products and services makes it possible to cope with markets and innovations that are always on the move.
How to succeed in diversifying products and services?
For this strategy to be successful, it is necessary to monitor the market more closely, as well as the competition, of course. We need to take the time it takes to scrutinize not only competing offers, but also prices and development strategies. The analysis of the targeted clientele is also a step that must be taken at all costs.