For ambitious entrepreneurs, there’s a continual drive to grow your brand and increase your sales and profits. The downside is that this rarely happens organically and that a significant amount of time, effort, and investment is often required to see results.
There are lots of different channels for achieving this, but one of the most effective is diversification. Defined as a growth strategy that involves expanding into new products or markets, it can be tricky to get right, but when it’s a success, it can have a hugely beneficial impact on your brand.
Here are a few reasons why you might want to consider it, along with growth strategies and case studies to show you how it’s done.
It can enhance your appeal
If there’s one thing diversification is guaranteed to achieve, it’s an increase in your appeal. That’s because the more products, goods, or services you offer, the greater your chances of selling something your consumers want to buy.
One industry that understands this is the online gambling sector and Bingo Betfair provides a prime example. Despite starting primarily as a bookmaker, the company has now expanded into many other areas, from online bingo to slots, table games, and even scratchcards.
The reason this works so well, and the lesson you can take from this, is because all of the company’s products are complementary. Were you to try and achieve the same result by diversifying your catering company into a shoe retailer, you’d have less success; were you, instead, to diversify into events hosting, growth would be much more likely.
It can stimulate growth
Example: Kylie Cosmetics
As we mentioned above, the most attractive aspect of diversification is its ability to increase your appeal among consumers, and this has the effect of organically stimulating growth. Even if this is your primary rather than secondary goal, diversification may be the key.
Take a look at a company like Kylie Cosmetics. Kylie Jenner and the meteoric rise of her company are often documented in the news and media, partly because of her celebrity standing but also due to the young entrepreneur’s business nous.
So how do you become a billionaire by the tender age of 21? A clever diversification strategy forms part of the answer. While the makeup mogul has stuck with what she’s familiar with, she’s nonetheless diversified her range to encompass a variety of beauty products, from staples like her eyeshadow palettes through to perfumes and fragrances.
The result is that purchasers will always find more than one product they want to buy; they can never own them all. They’re thus more likely to make repeat purchases and stimulate sales and growth.
It creates stability
Also, diversification can act as a stabilizing influence on your company, protecting it against the vagaries of the future. If you’re wondering what we mean by this, take Netflix as an example.
Beginning its life as a DVD subscription service, Netflix could very easily have gone the same way as competitors like Blockbuster. As the industry shifted dramatically, however, the company diversified into an online streaming service, creating a buffer for when the bottom fell out of its original niche.
The result was that while its former peers fell by the wayside, Netflix went from strength to strength, growing from seven million to 93 million users in the space of a decade. Today, this number is even higher, with an estimated 195 million paid subscribers.
From online bingo sites to beauty brands to streaming services, diversification has proved key to the success of so many different companies. Isn’t it time you thought about diversifying your own business offerings?