Question

Topic: Student Questions

Horizontal Diversification V/s Product Development

Posted by keskarsanjit on 3/5/2021 at 11:50 PM ET 125 Points
Product Development = new / modified /improved products ; existing markets
Horizontal Diversification = company adds new products or services that are often technologically or commercially unrelated to current products but that may appeal to current markets (most popular explanation on the internet)
This makes Horizontal Diversification a part of Product Development intensification strategy.
Horizontal Diversification is also spoken of as synonymous with tehe term concentric or related diversification

This creates confusion for me between the two terms

May i be helped and de-confused about these two terms with reference to the clasic ansoff 2 x 2 matrix?
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RESPONSES

  • Posted by mgoodman on 3/8/2021 at 1:31 PM Accepted
    Suppose a company currently makes and sells guns.They want to grow, so they can:

    (1) invest in making more/better guns; or

    (2) add butter to their manufacturing process and make butter for the militaristic gun customers.


    ==

    OK. So that might be an extreme example, but I'll bet your CEO will be able to figure it out.
  • Posted by Mike Steffes on 3/9/2021 at 11:50 AM Member
    You seem to be overthinking it. On your matrix: Horizontal is product change. Vertical is market change.
  • Posted by Peter (henna gaijin) on 3/9/2021 at 12:54 PM Accepted
    Based on the description at https://en.wikipedia.org/wiki/Ansoff_Matrix, Horizontal Development and Product Development would be basically the same. Both are aiming to bring new products to existing customers.
  • Posted by keskarsanjit on 3/11/2021 at 1:46 PM Author
    Yes Mike Steffes, I am aware of the change along the product axis and the market axis but diversification is a change in BOTH - the product axis AND the market axis
  • Posted by Mike Steffes on 3/11/2021 at 1:54 PM Accepted
    So, what's confusing about that? Someone changes the product-type and sells that to new people. There are innumerable shades of change... that matrix is just one way to grossly simplify a picture that can actually be very nuanced. Don't waste time trying to figure out why a simple description doesn't work perfectly for all of life's situations.
  • Posted by Shelley Ryan on 3/29/2021 at 11:43 AM Moderator
    Hi Everyone,

    I am closing this question since there hasn't been much recent activity.

    Thanks for participating!

    Shelley
    MarketingProfs
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