Horizontal Diversification versus Product Development. What's the Difference?

Product/Market Grid
Knowledge Center

Forum
Sanjit Keskar
Professor, India

Horizontal Diversification versus Product Development. What's the Difference?

🔥NEW From the summary article on this site about the Ansoff Matrix.
Product Development. Sell new products or services in current markets. These can be accessories, add-ons, or completely new products...
Horizontal diversification. This occurs when the company acquires or develops new products that could appeal to its current customer groups even though those new products may be technologically unrelated to the existing product lines.
Both seem to be saying the same thing as far as completely new products and existing market (current customer groups).
So where is the difference? And isn't diversification also about new markets - so where is the new markets in horizontal diversification?

  Jaap de Jonge
Editor, Netherlands
 

Product Development versus Horizontal Diversification

Good question.
First of all, BOTH of these strategies are dealing with a situation of a business firm attempting to market NEW PRODUCTS (or services).
  • As the summary states correctly, in the case of a product development strategy a la Ansoff, we are aiming to sell NEW PRODUCTS IN THE CURRENT MARKET.
  • In the case of diversification we are aiming to sell NEW PRODUCTS IN A NEW MARKET.
  • In case of horizontal diversification the clients are the same. Because horizontal diversification involves providing NEW PRODUCTS IN A NEW MARKET TO EXISTING CONSUMERS. For example, a cosmetics firm aims to enter the jewelry market by marketing these jewelries to its loyal cosmetics customer base.
Remember to pay attention to the subtle difference between "clients" and "markets". Hope this helps..

  Isaiah Maisiba
Manager, Kenya
 

Product Development versus Horizontal Diversification

The points of distinction lie upon: level of risk envisaged, resources available (synergies), and corporate market strat...

  Paramathmuni srinivas Kumar
India
 

In Blue Ocean Strategy is it Diversification or Product Development

If we were to create and capture the uncontested market then I don't think the definition fits into the above mentioned ...

  Isaiah Maisiba
Manager, Kenya
 

Product Development versus Diversification and Blue Ocean Strategy

Blue Ocean Strategy (BOS) falls, in my view, within the'Diversification strategy ' in the Ansoff matrix. Seemingly an ex...

  Jaap de Jonge
Editor, Netherlands
 

Blue Ocean Strategy Could be Diversification, But...

@Isaiah Maisiba: Some thoughts… According to our short but accurate Summary of Blue Ocean Strategy, a Blue Ocean Strateg...

 

More on Product/Market Grid:
Summary
Forum
Turbulence, Planning and Paralysis by Analysis
How to Prioritize Business Growth Opportunities (Ansoff): The ICE Prioritization Tool
👀Horizontal Diversification versus Product Development. What's the Difference?
Diversification in Africa: Why African Economies must Diversify
Strategies for Expanding a Business
Best Practices
Ansoff Matrix Applications
How to Decide in Which Sector to Diversify?
Diversification Types and Examples
What is the Optimal Level of Diversification for Firm Performance?
Special Interest Group

Do you have a keen interest in Product/Market Grid? Become our SIG Leader

Product/Market Grid
Knowledge Center



About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
© 2022 12manage - The Executive Fast Track. V15.8 - Last updated: 1-7-2022. All names ™ of their owners.