Business: How Much of a Risk is Diversification?
Diversification is a means to reduce risk or increase profits by splitting your product offering over multiple audiences. This may sometimes mean creating new but similar items to sell or simply altering the packaging of an existing product to appeal to a new niche. A particularly good example of this kind of strategy is gendered items such as razors, which can be priced differently despite including the same materials. Demographics As a business tactic, it’s not always a particularly honourable one, as the latter example demonstrates, but it can help a company offset losses from one demographic if the others are enjoying some success. In other words, much of the early appeal of diversification is in the value of having a backup plan should everything go south. Digital diversification can be a different matter altogether, though. In many cases, the diversification of a virtual product may simply mean adapting the same thing for a new market or audience. Online businesses that operate a service, such as a video game, will often create multiple clients for several different countries. In this…
