What is product diversification?

Product diversification involves creating new products for new markets. This strategy allows businesses to expand their reach and mitigate risks associated with market fluctuations and changes in consumer preferences. By developing entirely new products, companies can tap into different consumer demographics and potentially increase their revenue streams.

In contrast, the other choices focus on different strategies:

• Developing new products for the same market centers on innovation within an existing consumer base, which does not broaden the target audience.

• Entering foreign markets with existing products leverages current offerings in new geographic areas but does not inherently involve the creation of new products.

• Improving existing products involves enhancements or upgrades but maintains the same product line rather than venturing into new market territories with new offerings.

By pursuing product diversification, businesses can explore uncharted territories, thus positioning themselves for growth and adaptation in a competitive landscape.