This document discusses the marketing strategies of a product diversified company. It defines product diversification as entering a new market or industry with a new product. There are three main types of diversification: concentric/related which involves related activities within an industry; conglomerate/unrelated which involves unrelated activities; and horizontal which adds new products for current customers. The goals of diversification include minimizing risk and capitalizing on strengths. While diversification can lead to growth, it also carries risks such as decreased focus on the core business. Successful diversification requires managing complexity and acquiring new skills.

1. MARKETING STRATEGIES OF A
PRODUCT DIVERSIFIED
COMPANY
Presented by:
DELWIN KURIYAKOSE (44)
JECC 1

2. PRODUCT DIVERSIFICATION
• Diversification is a corporate strategy to enter into a new
market or industry which the business is not currently in,
whilst also creating a new product for that new market.
• This is most risky section of the business which has no
experience in the new market and does not know if the product
is going to be successful.
• Diversification is part of the four main growth strategies
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4. • The notion of diversification depends on the subjective interpretation of
“new” market and “new” product, which should reflect the perceptions
of customers rather than managers.
• Product diversification involves addition of new products to existing
products either being manufactured or being marketed.
• For example, adding tooth brushes to tooth paste or tooth powders or
mouthwash under the same brand or under different brands aimed at
different segments is one way of diversification. These are either brand
extensions or product extensions to increase the volume of sales and the
number of customers
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5. DIVERSIFICATION STRATEGIES
The strategies of diversification can include internal
development of new products or markets, acquisition of a
firm, alliance with a complementary company, licensing of new
technologies, and distributing or importing a product line
manufactured by another firm .
There are three types of diversification:
• Concentric or Related Diversification
• Conglomerate or Unrelated Diversification
• Horizontal Diversification
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6. CONCENTRIC OR RELATED
DIVERSIFICATION
• When an organization takes up related activities within a wider
industry situation, it is termed as “Concentric Diversification”
• Example: A sewing machine manufacturer starts
manufacturing Kitchen appliances (Wider Industry situation –
Women as concentrated target group, Kitchen appliances as
concentrated product range etc).
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7. TYPES OF CONCENTRIC
DIVERSIFICATION
• Marketing-related concentric diversification
• Technology-related concentric diversification
• Marketing and Technology-related concentric diversification
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8. • The technology would be the same but the marketing effort would
need to change.
• It also seems to increase its market share to launch a new product
that helps the particular company to earn profit. For instance, the
addition of tomato ketchup and sauce to the existing "Maggi" brand
processed items of Food Specialities Ltd. is an example of
technological-related concentric diversification.
• The company could seek new products that have technological or
marketing synergies with existing product lines appealing to a new
group of customers. This also helps the company to tap that part of
the market which remains untapped, and which presents an
opportunity to earn profit.
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9. CONGLOMERATE OR UNRELATED
DIVERSIFICATION
• A conglomerate is a combination of two or more corporations
engaged in entirely different businesses that fall under
one corporate group, usually involving a parent company and
many subsidiaries.
• In other words, a conglomerate takes up such activities which are
unrelated to the core business.
• If a company is expanding into industries that are unrelated to its
current business, then it is engaging in conglomerate
diversification.
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10. • For example , the car company we have been discussing may
decide to enter the computer business , the tooth paste business
, the real estate business.
• Conglomerate diversification is a good means to manage risks
as long as you can effectively manage each business , which
lead us to the disadvantage. Management may not have the
skills or experience to manage the new enterprise.
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11. EXAMPLES OF CONGLOMERATES
• TATA GROUP
• ADITYA BIRLA GROUP
• ITC GROUP
• TTK GROUP
• RELIANCE
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12. HORIZONTAL DIVERSIFICATION
• The company adds new products or services that are often
technologically or commercially unrelated to current products
but that may appeal to current customers.
• This strategy tends to increase the firm's dependence on
certain market segments.
• For example, a company that was making notebooks earlier
may also enter the pen market with its new product.
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13. When is horizontal diversification
desirable?
• Horizontal diversification is desirable if the present customers
are loyal to the current products and if the new products have a
good quality and are well promoted and priced.
• Moreover, the new products are marketed to the same
economic environment as the existing products, which may
lead to rigidity or instability.
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14. GOAL OF DIVERSIFICATION
• There are two dimensions of rationale for diversification. The first
one relates to the nature of the strategic objective: Diversification
may be defensive or offensive.
• Defensive reasons may be spreading the risk of market contraction,
or being forced to diversify when current product or current market
orientation seems to provide no further opportunities for growth.
• Offensive reasons may be conquering new positions, taking
opportunities that promise greater profitability than expansion
opportunities, or using retained cash that exceeds total expansion
needs.
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15. REASONS OF DIVERSIFICATION
• Minimizing Risk
• Capitalize on Strengths
• Provide a new perspective in business
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16. RISKS OF DIVERSIFICATION
• Unrelated diversification is complex and confusing
• Diversification demand a wide variety of skills
• Decreasing commitment on the core business
• Often results in losses
• Increases the administrative costs
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17. EXPECTED OUTCOMES OF
DIVERSIFICATION
• Management may expect great economic value (growth,
profitability) or first and foremost great coherence with their
current activities (exploitation of know-how, more efficient use
of available resources and capacities).
• In addition, companies may also explore diversification just to
get a valuable comparison between this strategy and
expansion.
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18. EXAMPLES OF SUCCESSFUL
DIVERSIFICATION
• Apple moved from PCs to mobile devices.
• Virgin Group moved from music production to travel and
mobile phones.
• Walt Disney moved from producing animated movies to theme
parks and vacation properties.
• Canon diversified from a camera-making company into
producing an entirely new range of office equipment.
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19. ORGANISATIONS WHICH SELDOM
DIVERSIFY
• Public Sector Enterprises
• Non Government Organizations (NGOs)
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20. CONCLUSION
• Diversification strategies involve widening an organisation’s scope
across different products and market sectors. It is associated with
higher risks as it requires an organisation to take on new experience
and knowledge outside its existing markets and products. The
organisation may come across issues that it has never faced before.
It may need additional investment or skills.
• On the other hand, however, it provides the opportunity to explore
new avenues of business. This can spread the risk allowing the
organisation to move into new and potentially profitable areas of
operation
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21. THANK YOU
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