Product Expansion is when companies grow their businesses by adopting a market expansion strategy. This is when a company will attempt to reach out to other markets after capturing the interest of their target market. Product line expansion is the increase of number of product types in frame of same industry. Diversification is the process of parallel production/development/investment expansion in different industries. Product Line Extension – is addition of item to the same product category under established product brand name, as against Diversification – which is a corporate strategy to enter new market with new brand products. 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.
The diversification also provides opportunities to grow the business by increasing sales to existing customers or entering new markets. Product-line expansion can take a number of forms, including new versions of an existing product, upgrades to existing products or completely new products.
Like the market development strategy, product development strategy involves some risk. This one leverages new products in existing markets. This tactic is ideal for companies who want to launch a new product in an existing market.
It’s great for times when products that used to be popular aren’t selling any longer. Companies must approach this strategy with caution, though, since it tends to be more expensive and time-consuming than market-focused tactics.
To work, companies must collect detailed market analysis, including data on customer needs. This early research helps ensure products are useful and will stimulate growth.