The main purpose of starting a business is to make profit, for that marketing strategies are an essential tool that not only help to expand your business but also to generate and provide revenue. Although there are many marketing strategies that are considered to be the most successful but one strategy which may be progressive for one business might fail for the other business.
With the ever developing global market, new marketing strategies are being formed and tested but still there are some established basic strategies which may help as they have been tried and been found generally effective over the years.
Diversification
Diversification is one such marketing strategy, which is applied in order to increase profits by increasing the sales of the product. By expanding the product variety or by launching into new market segments, this strategy aims to boost the sales volume.
Diversification may be of many kinds depending upon the company, as they may venture into a product slightly related to their own line of product by affiliating it with their brand and targeting their loyal customers, called horizontal diversification, or by going into a completely different line of technology and targeting a new market segment. This is called lateral diversification.
Like all strategies, diversification has its pros and cons. The main advantage that this risky strategy holds over the other four strategies stated in the Ansoff product market strategies is that it helps and pushes the company to reach its potential and possibly expand to horizons unexplored yet.
For joint ventures and acquisitions may be successful because of the established brand name backing a new product line or for a developing company, it provides new avenues in terms of target market and experience. One of the biggest risks in this strategy is that you may not have the required experience and the understanding of the new product and its market and this may become the prime reason for the acquisition to fail.
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