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For any business venture, it is always good to evaluate the market from time to time to identify any changes that might be important to make to empower to business. If any change might be considered as a decisive move to strengthen the venture against the competitors, as well as its revenue base, it would be a prudent thing to make such a diversion. Diversification can always take place in many forms as long as they are meant for the better of the business. One of the common strategies that are employed in a bid to broaden the scope of an organization’s business is adding a new line of production.
The coca-cola company is one notable company has in the past employed this strategy in order to counter the competitor’s control of the market. Any time a new company brought to the market a soft drink that goes well into the market, they produce a similar product to ensure that their customers do not opt for the competitor’s product. In this way, they can maintain their customer base. One such occurrence happened in the coca-colas East African market. This was when the largest alcoholic drinks producer; the East African Breweries produced a soft drink called Alvaro. The drink, having been introduced by an active company, quickly picked in the market and was posting great completion to the products of coca-cola.
In an effort to counter this new force in the market, the coca-cola company then introduced the Novida soft drink. It was a soft drink that had the same quality as that produced by the competitor. By so doing, coca-cola was able to counter the effect of the Alvaro drink in the market. This was easily possible since coca-cola had its product distribution strategy targeting many points of sales while the Alvaro producers supplied their product to alcohol drinking joint. The new product hence was accessed by many customers and, therefore, coca-cola retained its customers.
References
Sullivan, A; Steven, M. (2003). Economics: Principles in action. Upper Saddle River, New Jersey 07458:
Pearson Prentice Hall. p. 273. ISBN 0-13-063085-3.
