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Finding the best ways to diversify your products and services is an effective way to refresh a stale business and attract more customers. However, doing so is much easier said than done, and it is not something any business owner should take lightly. While it may seem simple to add new products and expand your reach, some issues could occur, and these could be damaging for your company. Before diversifying, there are several questions you must ask.
There is no point in diversifying your business if there is no demand for it. You can identify this demand by considering customer feedback. If customers have asked if you are adding new products or services, it could prove that the demand is there.
However, this is not always set in stone. While demand might be there for some customers, other businesses offer a better and more established product or service that will be difficult to compete against. You need to offer something unique and effective besides understanding whether demand is there.
You also need to ensure you have the right tools to achieve successful diversification. This could include qualified and experienced talent, but also more powerful software that can handle increased demand.
If you’re offering a brand new service, you should also look at equipment. There is no use in selecting cheap equipment, as this could affect the quality of the work or projects.
As profitable as diversification can be, it also poses risks. You may stray too far from your established brand, so it’s crucial to understand how to avoid brand dilution and prevent this.
If you are well-known for a specific service, offering brand new services could make your business feel the same as other companies that already have a foothold in the industry. Encroaching this section could harm your brand's perception, which risks alienating existing customers.
You will want to avoid risks when diversifying, but if you feel it is best for your business, consider working with another (non-competing) company to mitigate the risk.
There are many examples of successful co-branding partnerships from which you can learn and draw inspiration. One example is retail stores and coffee shops. These operate in different industries, but working together is beneficial for their customers who can pick up a drink while shopping, ensuring success for everyone involved.
Many companies dream of successful expansion. Although there are examples of success, there are many more that have failed along the way. Your business must evolve with the demands of your industry, and as long as you have asked yourself these questions and been honest with yourself, your company could be ready to diversify and thrive with its new offerings.
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