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Market segmentation groups customers according to common characteristics and needs. Concentric diversification is a business term with many syllables all pointing towards a business achieving large goals with smaller working parts.

A company employing the concentric diversification strategy seeks to add complementary products and services across several market areas as a means of establishing a wide distribution network. This technique can provide several key benefits for a growing business, including the ability to reach a national consumer audience.

Concentric diversification is a type of business strategy where a company acquires or creates new products or services to reach more consumers. These new products and services usually are closely related to the company's existing products and services. For example, an office supply company seeks to purchase paper manufacturers or ballpoint pen creators.

Synergy is the ability of smaller departments or divisions within a company to achieve larger goals than would be possible as separate entities. Creating synergy is only possible when a business achieves strategic fit through concentric diversification.

Strategic fit is the result of a business acquiring or developing complementary divisions or products.

Diversification

For example, a toy manufacturer can purchase other toy manufacturers across the country as a means of increasing product distribution and bringing company product into new market areas. According to eNotes, an education wesbite, there are several forms of business synergy: Developing synergy in marketing through concentric diversification leads to improved product development.

A company is better able to perceive the needs and desires of consumers in given market areas when the company's marketing division works closely with the product development department. This helps ensure that the business is only creating or acquiring products define conglomerate diversification strategy services that fill demonstrated needs or demands within given market areas. The company also controls its costs better through this strategy because the business isn't wasting money creating or buying products without consumer research to back up expected performance in the market.

Market share is the percentage of a total consumer market ameritrade stock traders a company occupies with its products or how much money do environmental scientists make. The larger a company's market share, the more presence the company has in a given consumer market.

Increased market share through a larger product presence leads to higher sales because consumers see this product more often than the products of competitors. This makes it more difficult for smaller companies to compete with a business holding a large share of the market. Concentric diversification allows a company to increase its market share because it establishes a product presence across a much wider market area.

Jonathan Lister has been a writer and content marketer since His latest book publication, "Bullet, a Demos City Novel" is forthcoming from J Taylor Publishing in June He holds a Bachelor of Arts in English from Shippensburg University and a Master of Fine Arts in writing and poetics from Naropa University. Skip to main content. Concentric Diversification Definition Concentric diversification is a type of business strategy where a company acquires or creates new products or services to reach more consumers.

Diversification (marketing strategy) - Wikipedia

Achieving Business Synergy Synergy is the ability of smaller departments or divisions within a company to achieve larger goals than would be possible as separate entities. Improve Product Development Developing synergy in marketing through concentric diversification leads to improved product development.

Increased Market Share Market share is the percentage of a total consumer market that a company occupies with its products or services.

About the Author Jonathan Lister has been a writer and content marketer since Suggest an Article Correction.

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