In a competitive market such as Malaysia, staying ahead of the competition is essential for any business. In order to be a dominant market leader, having an up-to-date product or service offering that stays ahead of the trends as well as meeting your customers’ needs and wants is crucial. Diversification is a corporate strategy of adding new products and services to a business model in order to gain a competitive advantage and ensure long-term success of an organisation. Here are some key benefits of diversifying your product or service offerings:
Why companies should diversify their range of products and services
When it comes to the selling of products and services, there are advantages to a well-planned diversification marketing strategy. A successful business that is well diversified in its offerings will stand to gain the following benefits:
1. Growth of market share
Diversification helps businesses increase their reach and this in turn sparks a growth of their customer base, leading to an increase in market share. This strategy can be achieved by expanding the range of existing products and services or through the launch of new product lines.
2. Increase of sales and revenue
When a company is able to tap into different customer segments in a market through diversification, they can increase their sales and revenue. This is a marketing strategy that helps businesses gain new customers and establish a stable base of brand loyal returning customers.
3. Opportunities for new revenue streams
Diversification can open up new avenues for a business to make money. It also provides the opportunity to explore different areas of the industry and discover new lines of business that can be potentially profitable. For example, a company may consider expanding its current product line to attract a new target segment.
4. New products/services help achieve higher margins
As mentioned above, through the diversification of products and services, businesses have a better chance of achieving higher margins as customers are inclined to pay more for something that is novel or tailored to their needs as opposed to something that is generic and ubiquitously found in the market.
Opportunities through ethnic and cultural diversity
In terms of product management, Malaysia’s diversity presents a wide range of strategic opportunities for businesses to expand their offerings as part of their diversification strategy. As the country is made up of a multi-ethnic and multicultural population, businesses should cater their products and services to various ethnic and cultural groups. This could mean offering products that are tailored to meet the needs and wants of a specific group.
For example, a business specialising in halal food products can consider introducing a range of spice mixes that is targeted at the ethnic Indian community by using local spices and herbs widely used by the Malays, while a business that sells traditional Chinese medicinal products can work towards the creation of a range of halal herbal remedies and other health supplements that are suitable for the Muslim market.
Mitigating business risk and increasing competitiveness
Growing your existing consumer base or cultivating a new market segment through the expansion of your product and service range will also help balance the level of risk that your business assumes. This is because you can reach out to different markets and cater to their needs, resulting in a more solid foundation for your business. In addition, the diversification of your offerings can also give you the edge over competitors who are not engaging in such strategies, making you better positioned to ride any upcoming trends that could give you a competitive advantage.
