1.To get more product variety.
When you diversify your offerings, you’ll almost certainly conduct thorough research and development, resulting in the introduction of a wider range of products to capture the new market. You attract more consumer interest with more product variety, and the brand gets a huge boost, as does the company’s profitability. As a result, having a larger product line is beneficial to your business.
2.To trap more markets.
When you have more goods and need more markets to sell them, the scope expands. Diversification strategy is described by new products and new markets. With more markets, the distribution and total turnover will improve. While entering new markets requires a significant amount of money and effort, once done, the new market can generate consistent profits, which is the aim of every business. As a result, diversification is also a strong market penetration technique.
3.For the ompanies to gain more technological capability.
The organization is more likely to grow technological capabilities as it spends more money on research and development. R&D is primarily concerned with technical innovation, with the aim of bringing innovative and improved products to market. As a result, implementing a diversification plan would almost certainly result in the business gaining more technical capabilities.
4.To benefit from economies of scale.
When you use the same factory to produce a larger number of goods, you benefit from economies of scale, which lowers your costs and increases your margins. Another benefit of a diversification approach is this.
5.To achieve cross selling.
You may launch new products in a new market or launch older products in a more mature market. LG, for example, offers a wide range of goods to end users and therefore cross-sells its own.
6.For brand equity
As your brand’s brand value grows as a result of more goods and market penetration, your brand’s brand recall and scope increase significantly. As a result, the brand will reap long-term benefits. Samsung is an excellent example in this situation. Samsung smartphones have given the Samsung brand a huge boost, resulting in a positive vibe surrounding all of the company’s products simply because they are Samsung.
7.Protection from competing companies.
Through product diversification a company is able to out do its competitors as diversification offers a tremendous boost to brand image and profitability.