In a marketplace diversification business growth strategy, you seek a different way to introduce your existing product or service into a new or adjacent geographical area, including offering your product or service in other cities or states. Most noteworthy fast-growing businesses in the last several years relied heavily on diversification as their main business growth strategy. Examples include Starbucks, Wal-Mart, Wendy’s hamburger chain, Reebok, and Alaska King Crab. Another successful example is Google, which not only designs but also sells and provides services associated with websites such as Google maps and Google Finance. Although there are other ways to provide services that might appeal to more local clients, these examples illustrate the principle of using locations as an important marketing tool.
How Does Diversification And Growth Work?
Diversification is based on the idea that some markets are untapped, while others are highly competitive. The most effective business growth strategies take these principles and apply them to geographic expansion. There are some broad business growth strategies that you can choose from, each with its own pros and cons. Some strategies involve moving your business to a different part of the country or even across the world. These business growth strategies usually follow one of two general paths: brand extension or brand invention.
Brand extension strategies involve expanding your company’s presence in the targeted market. This means extending the reach of your already established name. Brand invention strategies involve coming up with a new product, or concept, that is distinct from the products and services already offered by your competitors. Both of these strategies require comprehensive market research, and adequate time to formulate industry-specific plans and implementation.
Using Effective Diversification Strategies
If you’re looking for a diversification strategy for businesses large and small, it’s likely that you want to expand your business to multiple locations. This is one of the more difficult strategies to follow because it requires a lot of coordination among businesses in different locations. For this reason, many diversification strategies include a management team that consists of members from various locations. A successful diversification strategy may involve starting up a business in a new location, allowing existing businesses to take part in the expansion effort, or simply merging existing businesses. Regardless of the strategy that you choose, it is important to conduct thorough research into the current market climate in the areas you plan to open up branches in.
Another business growth strategy that you might consider is referred to as back-to-back distribution. Back-to-back distribution is the practice of selling goods manufactured in different factories at the same time. This type of distribution strategy requires extensive planning and strategic thinking. Companies often implement back-to-back distribution in order to cut operational costs, but there can be serious implications for workers in the factories that make the product. Many workers may face the loss of employment if they are improperly trained in preparation for back-to-back production. Companies also run serious risks of hurting their reputation and brand name in consumer perceptions turn around and they are manufacturing products that are subpar or faulty.
Diversification Leading To Expansion
Horizontal diversification is the most recent business growth strategy that is becoming increasingly popular among businesses. Unlike back-to-back or distributed diversification strategies, horizontal diversification involves the merging of two or more businesses that specialize in different markets. An example of this type of business would be a dentist who works with braces and other dental care services. A podiatrist might work with physical therapy and would want to provide his services in a clinic that also dealt with braces. The combined companies could be a dental practice and a podiatry practice. While this type of business growth strategy may seem like a complicated endeavour, the potential rewards are substantial and, over time, can lead to significant financial gains for any business.