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Diversification Analysis

Diversification analysis is a technique that helps a firm search for growth opportunities from

among current and new markets as well as current and new products. For any market, there is

both a current product (what the firm now sells) and a new product (what the firm might sell in

the future). And for any product there is both a current market (the firm's existing customers) and

a new market (the firm's potential customers). As Ben & Jerry's seeks to increase sales revenues,

it considers all four market-product strategies shown in Figure:

 Market penetration is a marketing strategy to increase sales of current products in current

markets, such as selling more Ben & Jerry's Bonnaroo Buzz Fair Trade–sourced ice cream

to U.S. consumers. There is no change in either the basic product line or the markets served.

Increased sales are generated by selling either more ice cream (through better promotion or

distribution) or the same amount of ice cream at a higher price to its current customers.

 Market development is a marketing strategy to sell current products to new markets. For

Ben & Jerry's, Brazil is an attractive new market. There is good news and bad news for this

strategy: As household incomes of Brazilians increase, consumers can buy more ice cream;

however, the Ben & Jerry's brand may be unknown to Brazilian consumers.

 Product development is a marketing strategy of selling new products to current markets.

Ben & Jerry's could leverage its brand by selling children's clothing in the United States.

This strategy is risky because Americans may not see the company's expertise in ice cream

as extending to children's clothing.

 Diversification is a marketing strategy of developing new products and selling them in new

markets. This is a potentially high-risk strategy for Ben & Jerry's if it decides to try to sell

Ben & Jerry's branded clothing in Brazil. Why? Because the firm has neither previous

production nor marketing experience from which to draw in marketing clothing to Brazilian

consumers. Figure: Four market-product strategies: alternative ways to expand sales revenues for Ben & Jerry’s using diversification analysis.