Listen to part of a lecture in a business class.
(female professor) OK, so, of course, businesses want to sell as many of their products as possible. Often a business sells mostly one type of product. But sales of this product may stop increasing because most potential customers have already bought it. In this situation, many companies will try to diversify, um, to develop or diverse product in order to increase sales. There are a couple of efficient ways that a company can diversify using some of their existing resources.One way a company can diversify is to use an existing technology, uh, technology that they already have to develop a new product. If a company already has some machines and technology to make a certain product, sometimes it can efficiently use that same technology to make a different product. For example, a company that makes televisions might start making computer monitors because the technology used to make these two products is very similar. So the company can use its existing technological resources to make the monitors. But with the monitors, it can reach new customers, people that wouldn’t buy television screens, like businesses that need to buy monitors for their employees’ computers. Another way a company can diversify is to try to appeal to its existing customers, its customer base with a new product. One of a company’s most important resources is its existing customers and these customers might have other needs that the company could fulfill with a different product. For example, a company that sells skis might have a large customer base that enjoys winter sports like skiing down snowy mountains. So they might start making ski jackets. The same customers that buy skis would also need warm ski jackets to wear while they are skiing. And since they like the company’s skis, they might be more likely to buy the jackets with the company’s name on them.
Using points and examples from the lecture, explain two ways a company can diversify.
The first way for a company to diversify is to use existing technology to produce a new kind of products that need the similar technology and sell them to the customers who only need the new products. For example, a company that sells TV may use the technology of screen manufacturing to produce monitor for computers, and in this way it can expand its market by reaching the customers who don't need TV, but computers, like a company that needs to buy monitors for its employees. Another way is to create a new product and sell it to its existing customers who may have other needs. For example, a company selling skis may also produce ski-jackets and sell them to the consumers that have already bought their skis. Now that these customers must enjoy winter sports like skiing on snowy mountain, they will also need snow jackets to keep warm. And their preference of the ski brand will lead to their purchase of snow-jackets of the same brand. (168 words)
