What is horizontal diversification, and how to achieve it

Needs are always dynamic and change with time and so do customers’ needs. Companies need to be agile and on their toes forever to meet their needs and have suitable products to fulfill the requirements of every customer. It is a significant step that enables the companies to grow bigger and better and sustain the ever-growing competition in the market.

Horizontal diversification here serves the purpose perfectly and adds value to the products and services offered by the company. In addition, it also caters to the customer’s dynamic needs, thereby serving the dual goal.

Horizontal diversification is the way forward for business development.

Horizontal diversification has recently garnered enough popularity and is a part of every plan for business development. So what exactly is horizontal diversification?

In layman’s terms, it is a method to diversify the set of products offered by the company and add new ones to the list of existing ones for the existing customer base and to attract new ones too. The latest products added can be similar to the current products or can be modified. Or else these products can be different from the existing ones too. The primary aim of introducing such products is to offer new services to expand the company’s consumer base and expand services to the current consumer base.

Horizontal diversification enhances how customers can fulfill their needs more efficiently. Adopting such strategies improves the company’s image and makes it resilient to changes and versatile to new strategies for widening the dimensions of growth.

How to achieve horizontal diversification?

Not a task to stress upon only if you know the intricate details to crack the code. Horizontal diversification is all about understanding the market and customers’ needs.

It’s a process of understanding the gaps in the product line and putting them along with the customer’s demand. It is a multitasking process that requires thorough market research of the company products and what is brewing. It is where understanding the customer behavior and from where the sales are generating significantly. Such a step enables an insight into the portfolio of different products. The analysis performance of products and the responses to them is one of the ways to decipher how and in what ways horizontal diversification can fit in to provide adequate solutions.

There are several ways to undertake horizontal diversification. Once it is realized that there is a need to introduce new products or modify the current line of products, the company can either manufacture those products in-house using the existing technological know-how and human resources. Another way can be to take on board a firm with adequate experience in manufacturing such products. The latter suits the scenario when there is a need for new products. Having an explicit knowledge of one’s resources and capacity can go a long way in determining the suitable options that are not only financially viable but also give positive results.

Fipro assists those who need more clarity on their business strategy. It helps companies gather further decoding of their existing finances and aids their effort to develop their businesses efficiently. Horizontal diversification can get complex; however, with better understanding of the product lines and their Financial implications, a team of experts at Fipro will streamline your process.