Lessons learned over the past 3 years remind us of the old adage “don’t put all your eggs in one basket”. A real lesson in wisdom because if we focus on the present, we have to think about the future and the future is always associated with uncertainty because we are not watchers. Sometimes some mergers take us by surprise, but they often happen with a view to finding opportunities in uncertain markets. During the confinement, we have seen many companies diversify to respond to the shortage of masks, gels and have gained sympathy from the French as a result. Deciding to diversify your products or services is a real strategy and this decision can be made not only on the basis of target, products offered by competitors, but above all because you have found the product which gives you added value and innovation. will bring growth. In short, medium or long term or say that your existing products are no longer in vogue and the number of your clients is decreasing.
Diversification is often confused with diversification and often causes the concern of leaders who fear diversification to lose the core of their business, but also from many preconceived notions that reflect on the negative image perceived by consumers. are broadcast.
diversification in a nutshell
However, to diversify is to create or integrate one or more products that can be integrated vertically, i.e. to create a subsidiary that aims to reduce costs or to integrate horizontally i.e. to create new products. Products that are not similar to your current ones but which are complementary or opt for group diversification, i.e. to offer completely different products as does the Laposte Group, which develops in the health sector and which is based on its experience. Makes use of the skills acquired through the medium.
Diversification, an opportunity?
If many companies, VSEs, SMEs, large companies, opt for diversification, it is because it is the source of growth. This makes it possible to meet the needs of other customers and therefore to strengthen the already existing links and therefore strengthen their customer loyalty, which ensures their loyalty to your company but also to make your company sustainable. Because markets are changing a lot but so are innovations and growth requires us to anticipate the future.
Some examples of diversification
Diversification means meeting the daily needs of the consumers. Thus Picard now offers meals that allow employees to have lunch in their offices with breakfast products that can be reheated in a microwave in three minutes and therefore avoid going to a cafe that is too high. And that often represents the cost of a restaurant ticket.
Similarly, if we look at SEB company, which has been able to diversify by integrating competing companies or which provides complementary products, we understand that its mode of operation is to diversify by estimating and innovating.
Likewise, Danone, which has continued to add new products since its creation: mineral water, dairy products, organic products among … it offers a full range of food.
Similarly, the channel is diversifying its activities to maintain its position as the leader in luxury. Chanel bought the company Farftech in February 2018, bringing its digital prowess to it, and in September 2018 acquired swimwear from British brand Orlebar Brown, which enabled it to invest in the men’s market but also benefit from digital expertise. Brand, which accounts for 40% of sales on the Internet.
This diversification is based on relationships with customers, but also on what is called the logic of range, but this logic must also integrate various logistical, strategic, commercial and financial parameters and therefore before carrying out any growth They should be kept in mind. not fail.
An essential factor: the life cycle of a product
Products go through life cycles: for example, bicycles, cars, etc. had their heyday thanks to technological innovations, but today due to the protection of the planet, it has become necessary for manufacturers to adapt and develop them.
So diversification makes it possible for the company to grow and be sustainable, but this diversification should be done with caution.