Concentric Diversification
Concentric diversification occurs when a company expands its business by adding new products or services that are closely related to its existing offerings. This strategy allows the company to leverage its current expertise, resources, and customer base to enter new markets or offer complementary products.
An example of concentric diversification is Samsung’s expansion from manufacturing electronics like televisions and smartphones into the home appliances market with products such as refrigerators, washing machines, and air conditioners. This move leverages Samsung’s existing expertise in electronics manufacturing and distribution channels while entering a related market segment. By diversifying into home appliances, Samsung can capture additional market share and revenue opportunities while providing customers with a wider range of products under its brand umbrella. This strategy allows Samsung to benefit from economies of scale, cross-selling opportunities, and synergies between its different product lines.