CHARACTERISTICS OF MARKET DIVERSIFICATION

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The essential characteristics of the diversification process are:


as a rule, new products and/or services are offered in other market segments than the existing sales and production program,
The application and way of using new products and/or services differs from existing products and/or services.
   


Depending on the specificity China Email List of these characteristics, three basic forms of diversification are distinguished: horizontal, vertical and lateral. Horizontal diversification is a business strategy in which the new product and/or service remains within the boundaries of the current business direction. Vertical diversification achieves the deepening of the production and/or service program.



But also rounding it off or completing it in such a way as to maintain an organic connection with the previous production and/or service orientation. Lateral diversification takes the company out of its previous business orientation and original business process because new products and/or services have nothing to do with previous production.


TO NEW MARKET
      Penetration into a new market must be based on research that allows you to be familiar with the basics of that market in order for the campaign to be successful. But also on knowing the wishes and needs of the customers of that market in order to successfully direct the promotional strategy to new potential customers. The marketing message you send to potential customers should be tailored to what they want, so you need to get to know the customers and the new market. In addition to penetrating a new market, there is the possibility of developing new products for the existing market. That is, product development for those customers you already know and know what they really want. It is also a great way to reward customer loyalty and further increase sales. And another advantage of this diversification is that if you already have satisfied customers with existing products, it is much easier to offer them new products. They will accept them more easily and with more confidence.


      But if you neither want to break into a new market nor produce a new product, it is possible to diversify an existing product and/or service. You will do this by adding new features to an existing product and/or service. This requires less costs because you have already done the market analysis and know the existing consumers. It is only necessary to upgrade the existing product with certain features or additional value in order to increase demand and sales.


RISKS OF MARKET DIVERSIFICATION
      Market diversification entails certain risks, first of all it requires careful research before launching a new product and/or service. It then requires the investment of additional financial and human resources to make the project successful. On the other hand, if the project turns out to be successful, it means additional earnings, an increase in market share and the growth of the company. As well as reducing the risk of the complete collapse of the company, because in case the existing product and/or service begins to lose value and fail, you always have that new product and/or service that is profitable. Basically, every new project and investment carries a certain risk, but if you thoroughly prepare and study the risk factors, you reduce the risk coefficient and the possibility of the project being unsuccessful.