Discourse on diversification
By Linda Forrest
A few weeks ago, as I trundled through a sparsely populated HMV, a retailer that’s rumoured to be on its way out of Canada (if not about to shuffle off this mortal coil altogether), I couldn’t help but wonder if its acronym still stood for His Master’s Voice or if its meaning had shifted and now accounts for the hats, mugs and videogames that have overtaken shelf space once devoted to recorded music.
Pair that with the intensive work we’ve been doing to launch our strategy practice and my mind turns to diversification as a marketing strategy. Wikipedia defines diversification in this usage, rather than its other recognized definition as a financial investment strategy, as “a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry which the business is already in. At the corporate level, it is generally…very interesting entering a promising business outside of the scope of the existing business unit.”
When does it make sense to branch out? How can your company go about determining if and when diversification is the right approach for you? Marketing experts like several of our Associates can provide you with strategic counsel on your particular scenario, but there are some tried and true considerations that must be truthfully answered to determine whether this is a successful evolution of your brand or a desperate move to increase revenues by trying to be all things to all people. Diversification is a risk, but it can be a calculated one.
