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No they are different.
A product line expansion is when a company creates a new product in the same product line of an existing brand. The strategy for an extension could be a different color or size, and it may have different ingredients or come in different flavors. The company is marketing the value and quality of the existing product line to introduce more choices to consumers. It’s a fairly low risk because you already have a successful brand. But, you don't want to overexpose your brand to the point where consumers are confused about what types of products you offer. So, it's important to maximize your exposure, but be smart about it. There may be times when a brand extension is a better marketing decision.
A diversification is a practice under which a firm enters an industry or market different from its core business. Reasons for diversification include (1) reducing risk of relying on only one or few income sources, (2) avoiding cyclical or seasonal fluctuations by producing goods or services with different demand cycles, (3) achieving a higher growth rate, and (4) countering a competitor by invading the competitor's core industry or market. In contrast to vertical integration, diversification does not increase a firm's market or monopolistic power.
Product-line expansion can take a number of forms, including new versions of an existing product, upgrades to existing products or completely new products.
Four Reasons to Expand a Product Line:
1. Life Cycle
2. Market Opportunity
3. Customer need
4. Customer loyalty
Diversification is a corporate strategy to enter into a new market or industry which the business is not currently in, whilst also creating a new product for that new market.
The diversification also provides opportunities to grow the business by increasing sales to existing customers or entering new markets.
Product line expansion is the increase of number of product types in frame of same industry. Diversification is the process of parallel production/development/investment expansion in different industries. E.g in my previous organization we had both. Product line expansion was following new technology i.e Plasma, LCD, LED etc; or Telephones 900MHz, 2,4GHz, DECT, etc.. Simultaneously our corporation diversifies the business in manufacturing, research and patents, financial and investments, travel and medicine, cinema studios etc
Product Line Extension - is addition of item to the same product category under established product brand name, as against Diversification - which is a corporate strategy to enter new market with new brand products.
They are not synonyms but both fall under corporate strategies of greater goal of any organisation which is Marketing Expansion and Increase in market Share.
Thanks
Senthil
A product line extension is the use of an established product brand name for a new item in the same product category.
Line Extensions occur when a company introduces additional items in the same product category under the same brand name such as new flavors, forms, colors, added ingredients, package sizes. This is as opposed to brand extension which is a new product in a totally different product category. Line extension occurs when the company lengthens its product line beyond its current range. The company can extend its product line down-market stretch, up-market stretch, or both ways.
Diversification is a corporate strategy to enter into a new market or industry which the business is not currently in, whilst also creating a new product for that new market. This is most risky section of the Ansoff Matrix, as the business has no experience in the new market and does not know if the product is going to be successful.
Diversification is part of the four main growth strategies defined by Igor Ansoff's Product/Market matrix
Thanks for the Invite.
Lets see the two terms separately first.
Product Line expansion is when a company creates a new product in the same product line of an existing brand. The strategy for an extension/expansion could be a different color or size, and it may have different ingredients or come in different flavors. The company is marketing the value and quality of the existing product line to introduce more choices to consumer
Product diversification is the process of expanding opportunities through additional market potential of an existing product. It may be acheived by entering into additional markets and pricing strategies.
As to my knowledge we cannot use the terms synonymously due to the fact that Expansion focuses on the product while diversification focuses on the market.
A product line extension is the use of an established product brand name for a new item in the same product category.
Ansoff's matrix could explain:
1. Market Penetration. is same product in existing market.
2. Market Development. is same product in new market.
3. Product development.is new product in existing market. (line extension)
4. Diversification. is new product in new market.
I couldn't have explained this better than Mr.Pravin Matey!
Product line expansion is extension of market with similar product category targeting to the almost same customer group. (From sale of desktop computer to sale of laptop computer, modem, laser printer, desk-jet printer etc.)
Product line diversification is extension of market with different product category targeting to almost different customer group (From sale of Information Technology product as above to sale of Home appliances such as Refrigerator, Freezer. Microwave oven, Juicer etc.)
I agreed with Mr. : Khalid Ghaffar answer..
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