It’s very common to see a well-established brand launch bold new products or services in different markets. It goes without saying that business growth should be the long-term goal of every company and brand. By diversifying products and services, companies of any size or industry can do just that.
Product diversification is a serious undertaking, and it isn’t without its risks. However, once you’ve taken the time to identify market opportunities and develop a business growth strategy, the benefits should far outweigh the risks. Not only will diversification sell more products to existing customers, but it will also reach out to new clients and expand into markets that might otherwise have been restricted. This is fundamental for business growth.
Identifying market opportunities
Diversification involves entering into new markets and industries that your business doesn’t currently operate in. It might consist of creating an entirely new product for that new market, or it could be a matter of tweaking an existing product to reach out to a new audience. There are many different ways to diversify and develop new products or services. It’s a significant process and one that you have to get right.
How do you decide what’s going to work? That’s where market research comes in. This should be the first, vital step of any diversification process. Before any new products or services are developed, it’s imperative that every company first takes some time to analyse the market. Consider if there is space for new products, what competitors are doing, and if your new product will offer a solution to a common problem. Market research goes a long way; without it, you’re setting yourself up to fail.
Why is diversity crucial to business growth?
Now that we’ve established how to identify business growth opportunities, let’s take a closer look at how product diversification helps you do just that.
You can reach more customers
Companies that focus on a narrow range of products and services have access to a limited number of customers. It’s great being a market leader and establishing a loyal customer base, but there’s still untapped potential. And when you operate in a small market with limited outreach, new competitors and new technology can quickly throw you off your perch. A diverse range of products promotes business growth because it helps you reach a greater range of customers – whether that’s by demographic or geography.
The impact of market change is greatly reduced
Many businesses have learnt the hard way that volatile market changes can have a devastating effect on trade. COVID-19 is a testament to that, as is Brexit. With a portfolio of products in several different niches, you’ll always have a way to generate revenue. Suppose one branch of your business begins to suffer due to new regulations or reduced customer uptake. In that case, you can look to build on the success you’ve created in another area that remains unaffected.
No more seasonal peaks (and troughs)
Many companies find that their products are tailored to suit customers at a particular time of year. So, it’s worthwhile looking for ways those products could be varied and redeveloped to generate revenue year-round. You’ll quickly grow and develop as a company when you have the resources to sell new products and services at each stage of the calendar year. Diversification means that instead of relying on one small, sharp uptake, you can increase profits throughout the year and get an edge over your competitors.
Diversifying your products and services costs time, money, and resources. However, after carrying out effective market research and identifying potential opportunities, the advantages of branching into new industries and markets will far outweigh the risks. This exciting process helps your brand grow in stature and puts your business in a position to benefit for years to come.