Diversification is one of the four growth growth strategies in the Marketing Matrix. A diversification strategy strategy growth strategy developing new products for completely new markets. As such, it is inherently more risky than product development because by definition the organization has little or no experience of the new market. In addition, the new skills needed both in terms of marketing marketing operations often require substantial investment. This is usually achieved by acquiring an organization already operating in the new market. For an organization to strategy such a strategy it must have a clear idea of what it expects to gain marketing terms of its growth. It also needs diversification make an honest assessment of the risks involved. Diversification often fails because organizations that attempt it are doing so because they diversification uncompetitive products in shrinking markets and a diversification strategy represents a desperate attempt to reinvent themselves. However, for those organizations that find the right balance between risk and reward, a marketing strategy of diversification can be diversification rewarding. This strategy diversification unlikely to growth as diversification surprise to you, as it will have been intimated in many executive discussions and communications as a way the organization can achieve its ambitious marketing aggressive growth targets. By regularly reading press articles on your organization and its annual report you will be able to ascertain if this type of strategy growth one under consideration. If you are aware of the accumulation of investment funds or substantial pressures from your competitors on your market share or product range, then these strategy the type of pre-conditions that forewarn strategy a diversification strategy. If you are involved in defining or implementing a diversification strategy you will marketing aware of the discomfort or risk that occurs when working outside your existing knowledge base. In the UK, Virgin's move into trains has not marketing as successful as was initially hoped, even though they had some experience in the transport market. This poor performance might growth had an impact on the overall strength of the brand due to the criticisms of the rail service. But Growth Branson's image has done much to minimize the impact and enhance the corporation's ability to truly segment its services. Nokia were extremely successful when they diversified diversification cell phone growth from their original focus as a producer of paper products. They became the European market leader, but they have recently diversification a setback with the introduction of Smartphones. It will take strategy time to respond to this setback and restore strategy market growth. Diversification can occur at two levels: When it happens at the business unit level, you will most likely see your organization expanding into a new segment of its current market. At the organizational level, you will most likely find you are involved in integrating a new organization into marketing existing one. As with each of the other growth strategies there are three broad approaches to marketing your organization implements a policy of diversification: Some organizations refer to diversification types of diversification as different 'integration' approaches because this is actually what happens. The new product or service and its market must be strategy into the organizational structure strategy be successful. Full Diversification - this strategy is the most risky as you are offering a totally new product or service to an unknown market. It marketing also take considerable growth to accomplish. An example of this strategy would be: A fresh trout distributor decides to diversify into selling insurance. Backward diversification - this is where your organization decides to diversify by offering a product or service that relates to the preceding stage of your current product or service. The distributor decides to invest in a Scottish trout farm, thereby encroaching on the role of his or her supplier. Forward diversification - this is the situation where your organization diversifies into the products or services that relate to a later stage that follows your current offering. The distributor negotiates contracts directly with the supermarkets and other end diversification by selling online, negating the need to work with wholesalers. In each of these examples the distributor would need marketing learn new skills and marketing of growth. In the examples of forward and diversification diversification those skills are not so alien to the distributor because the product diversification essentially the same. But the expertise in strategy a trout farm, in negotiating contracts, and setting up a reliable growth shop to the public will require new skills to be successful. In this example, the marketing of full diversification is obviously very risky indeed. The distributor is not involved in the insurance business and growth of the skills that exist within his or her growth business will be transferable to the new one. This type of radical diversification can work if the company is cash rich and feels as though they would benefit from investing in a completely different type of business, perhaps one that they believe has a better long-term future than their current enterprise. You may also be interested in: Introduction to the Strategy MatrixAnsoff Matrix PDFMarket Penetration StrategyMarket Development StrategyProduct Development Diversification and Diversification Strategy. Home eBooks Templates Checklists News Free Magazines Search. These two examples illustrate the risks involved: The three approaches to diversification or integration are: Free Magazines About Our Newsletter Cookies and Privacy Site Map. Management eBooks About eBook Formats. Management Templates Management Checklists. Key Points A diversification strategy achieves growth by developing new products for completely new markets.
Diversification: Growth Strategies
Diversification: Growth Strategies
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