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Product Diversification

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Product diversification involves modifying existing products in order to expand the market potential of a product. From changes in brands to changes in a product's target market, product diversification can obtain new clients for your product by leveraging an existing product's reputation and development platform to produce and sell a modified product. Successful product diversification requires accurate targeting and product differentiation to prevent eroding your current market and increase overall sales and profits.

  1. Brainstorm
    Brainstorm potential markets for an existing product with slight alterations. Consider geographic differences, demographic differences such as gender and age, and features that appeal to different groups. Obtain a strong list of potential new products for diversification efforts.

  2. Market Research
    Based on product brainstorming, conduct extensive market research into the viability of new products. Make sure new products align with different target markets than the customer base for your existing product to avoid eroding market share for your current product. Conduct surveys, focus groups and product trials to ensure product success prior to launching a new product.

  3. Demographic Diversification
    Diversify your product base by implementing changes in your demographic targets. A good example of demographic diversification by age is "Teen People" magazine. The standard "People" targets adult readers whereas "Teen People" targets preteens and teenagers. This diversification added readership and leveraged an existing brand to diversify and increase revenue. Consider demographic diversification if there are wide differences in preferences for your product based on gender, age, location or ethnic differences.

  4. Price Diversification
    Diversification can target new price points. For example, Marriott hotels targets mid- to upper-price point hotel customers. Marriott expanded into budget hotels by creating new brands---Fairfield Inn and Courtyard by Marriott hotels. Consider price diversification if there is a wide range of prices for the products or services you offer.

  5. Product Extension
    Create a new product that builds off your established brand image. For example, Reebok is known for athletic footwear. Reebok extended this image and created Reebok Fitness Water to diversify its product line and build off the success of its shoe line. Consider a product extension strategy if the existing market for the type of product you offer is already saturated and there are convenient ties to other product types. This strategy also helps reduce overall business risk by offering products in a variety of customer categories.

  6. Product Modifications
    Product modifications such as color or different features can help diversify your product offers. For example, Heinz expanded its ketchup offerings to include colored ketchup in purple and green. These products targeted consumers with children to capture additional market share. Consider a product modification strategy if you have budgetary constraints, or if slight modifications could lead to expanded market share or reinvigorate your existing product's image.


Read more:
Product Diversification Strategy | eHow.com
http://www.ehow.com/way_5272073_product-diversification-strategy.html#ixzz12gTvSNbr

Source :
http://www.ehow.com/way_5272073_product-diversification-strategy.html

 

 
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