“A company in the sewing machine business diversifies into kitchenware and household appliances and sells these items through a chain of retail stores to family consumers” – This is an example of:

Correct option is A

This situation illustrates marketing-related concentric diversification because the company is expanding its product line to different but related consumer segments, using similar marketing channels, customer bases, and distribution methods.

• The original business is in sewing machines, which cater to household/family consumers, especially those interested in home utility products.

• The diversification is into kitchenware and household appliances — products that also serve family-based consumers and fall under the household utility category.

• Even though the technology used to make sewing machines is different from that used in kitchen appliances, the target customers, marketing efforts, retail strategies, and branding platforms can be shared, making it a marketing-related move.

In concentric diversification, the new product lines are strategically aligned, either by technology, marketing, or both. Since the linkage here is through customer segments and distribution channels, not technology, it is marketing-related.

Information Booster:

• This diversification involves adding new products that appeal to the same group of customers.

• The marketing synergy lies in using existing customer relationships, brand recognition, and distribution networks.

• It helps in risk spreading while still leveraging brand loyalty.

• Example: A sewing machine brand moving into irons, toasters, and blenders, all targeting homemakers.

• Focus is on customer alignment rather than production capability.

Additional Knowledge:

(b) Technology-related concentric diversification

• This refers to expanding into areas where the technology base is shared across products.

• Sewing machines and kitchenware typically do not share production technology, so this is not applicable here.

(c) Marketing and technology-related concentric diversification

• Applies only when both marketing channels and technology infrastructure are shared.

• In this scenario, while the marketing linkage exists, there is no evidence of shared technology, thus this is not correct.

(d) Unrelated diversification

• Occurs when a company enters completely new industries with no strategic fit—neither marketing, technology, nor customer base.

• Here, the target audience and marketing strategy are consistent, so this is not unrelated.