Advantages of Unrelated Diversification
Unrelated diversification is a process wherein a small business is trying to expand yet utilizes a very diverse way to business expansion.
New products strike up the market so different from what one used to sell or offer. Advantages tags along with this marketing strategy.
The Meaning of Unrelated Diversification
This is a query that often bugs a person’s mind that constantly thinks over business expansion. This is actually a process that uses a different product that is offered to the market aside from the original product offered. One good example is a flower shop that offers different varieties of flower arrangement and flower styles. When unrelated diversification enters the business, this flower shop will expand to a coffee shop adjacent to it or maybe inside the flower shop. While the customers are waiting for their flower arrangement, they can meanwhile sip hot cappuccino. This is what unrelated diversification means.
Positive Points from Unrelated Diversification
The primary benefit from this is that an entrepreneur is spared from risking all his capital towards one business scheme. With the unrelated diversification, one expands the business using a different marketing plan. This is like hitting two birds in one stone. The business will grow hand in hand with each other for will boost the other. This is very advisable for a business that is experiencing economic crisis too. Instead of continuing to sell the products that are not so demandable yet, one can resort to drastic product change to aid the business for economic survival.
Outsmarting of the competition through this unrelated diversification is successful. The reason is that a business with this kind of scheme has a fair advantage to the other. On the flower and coffee shop example, customers will surely choose the shop wherein they can sip coffee too. Thus, the customers will be drag towards the shop due to the additional spice to it. Indeed, with unrelated diversification, the business will bloom and prosper positively. Healthy completion occurs as well as good revenue for the business.
Seasonality of products is an advantage to this unrelated diversification. The products that are in demand may come in hand with the original products sold in a business. There are actually downfalls in the trade as well as highs. When the business is low, these peak-seasoned products are available so that the revenue will not go down. Thus, this marketing strategy promotes cost efficiency. This is advantageous since one will not start all over again. Entrepreneur will only add up some spice to the trade. The risk to take to engage in unrelated diversification is worth it that merely concentrating in the original business enterprise.
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