Why Brands Should Leverage Diversification Strategies The Benefits And Challenges Of Brands Executing The Market Diversification Strategy And The Product Diversification Strategy And How Apple And Amazon Leveraged The Market Diversification Strategy
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Why Brands Should Leverage Diversification Strategies The Benefits And Challenges Of Brands Executing The Market Diversification Strategy And The Product Diversification Strategy And How Apple And Amazon Leveraged The Market Diversification Strategy
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Author : Harrison Sachs
language : en
Publisher:
Release Date : 2020-03-05
Why Brands Should Leverage Diversification Strategies The Benefits And Challenges Of Brands Executing The Market Diversification Strategy And The Product Diversification Strategy And How Apple And Amazon Leveraged The Market Diversification Strategy written by Harrison Sachs and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2020-03-05 with categories.
This essay sheds light on why brands should leverage diversification strategies and elucidates the benefits and challenges of brands executing the market diversification strategy and the product diversification strategy. How Apple and Amazon successfully utilized the market diversification strategy to become global Fortune 20 companies is delineated in this essay. Diversification strategies can be eminently efficacious strategies for renowned companies to leverage. The effective execution of a diversification strategy can allow a brand to maximize its profitability, draw forth more revenue streams, and mitigate future market risks. By competing in a slew of disparate lucrative markets, brands cannot only better hedge against future market and financial risks, but are able to vastly diversify their income streams as a result of entering emerging markets. "Market diversification entails extending your business offerings to new market segments not previously targeted, while product diversification means adding new products or services to expand the business offerings within existing markets. Both strategies can be eminently effective growth strategies" (Neil, 2017) for bolstering profitability, brand recognition, brand equity, and brand loyalty. The market diversification strategy allows brands to compete in new markets, garner more revenue streams, and mitigate business risks by not be dependant on a singular revenue stream. "Spreading business risks across multiple market segments lowers the potential of major failure if a market dries up or becomes less fruitful overtime" (Neil, 2017). The market diversification strategy can also allow brands to offer considerably more shareholder value to their investors overtime as they attain unprecedented brand growth and become far more profitable than foreseen. Even though the efficacious execution of the market diversification strategy can be highly beneficial, it can also be fraught with challenges. "Companies entering new markets through the market diversification strategy must consider the costs of entering new markets which include research and planning costs, marketing and advertising costs, and the costs of other activities needed to sell to a new segment.Understanding cultures in different domestic regions, and especially across global boundaries, can render marketing your brand products a challenge" (Neil, 2017). Moreover, besides overcoming the ample barriers to entry companies need to overcome to compete in more niche markets, companies may falter to remain a dominate competitor in the primary market they compete within when their focus is no longer earmarked towards being the pioneering innovator in one particular market. They also may need far more human resources as part of their workforce to compete more effectively in multiple markets. Mergers and acquisitions do not always bear fruitful results, especially when the employees from the acquired company feel disaffected by their superiors in the parent company. Another diversification strategy, the product diversification strategy, allows companies to add more complementary products to their product lines and subsequently draw forth additional revenue streams. This also allows companies to spread risks spread across ample products (Neil, 2017) and typically focus on being a leading innovator in one particular niche market. "Brands that have a strong recognition and presence are able to use established brand reputation as part of delivering the message about new product" (Neil, 2017) which helps them to generate more sales volume from the release of new complementary products.While the product diversification strategy has merit, it is not without its challenges. It can be costly to invest in research and development efforts and marketing efforts for upcoming products. Companies may also loose focus on improving their existing products by neglecting to remedy their kinks and not properly update them as needed.