What are the features of market diversification strategy?
4 years ago
Marketing
Features of the diversification strategy:
- Market penetration is less deep than in the concentration strategy.
- This strategy gives greater flexibility to the company due to a lesser assignation of resources to each market, which reduces vulnerability in those markets. Thus, it may be efficient to access markets with a high degree of insecurity and instability.
- It can be applied when the implementation of distribution activities in each new market or in situations where the company may divert distribution to third intermediaries in the destination market.
- There are not high costs of product adaptation to each new market due to cultural, economic, or legal issues.
- The company does not possess too much information about the variables that govern the function of each market. It has only superficial knowledge.
- It is useful for products in which quick delivery is a competitive advantage to gain access to country-markets. Also for those cases in which economies of scale are produced in the productive process, when the number of penetrated markets increases, with very competitive prices at international level.
- In general, it can be implemented in internationalization exploratory stages, as well as in more advanced stages when the company is more consolidated in the international markets.
Susmita Sah
Jan 17, 2022