We are independent & ad-supported. We may earn a commission for purchases made through our links.
Advertiser Disclosure
Our website is an independent, advertising-supported platform. We provide our content free of charge to our readers, and to keep it that way, we rely on revenue generated through advertisements and affiliate partnerships. This means that when you click on certain links on our site and make a purchase, we may earn a commission. Learn more.
How We Make Money
We sustain our operations through affiliate commissions and advertising. If you click on an affiliate link and make a purchase, we may receive a commission from the merchant at no additional cost to you. We also display advertisements on our website, which help generate revenue to support our work and keep our content free for readers. Our editorial team operates independently of our advertising and affiliate partnerships to ensure that our content remains unbiased and focused on providing you with the best information and recommendations based on thorough research and honest evaluations. To remain transparent, we’ve provided a list of our current affiliate partners here.

What is Horizontal Diversification?

Malcolm Tatum
Updated May 16, 2024
Our promise to you
SmartCapitalMind is dedicated to creating trustworthy, high-quality content that always prioritizes transparency, integrity, and inclusivity above all else. Our ensure that our content creation and review process includes rigorous fact-checking, evidence-based, and continual updates to ensure accuracy and reliability.

Our Promise to you

Founded in 2002, our company has been a trusted resource for readers seeking informative and engaging content. Our dedication to quality remains unwavering—and will never change. We follow a strict editorial policy, ensuring that our content is authored by highly qualified professionals and edited by subject matter experts. This guarantees that everything we publish is objective, accurate, and trustworthy.

Over the years, we've refined our approach to cover a wide range of topics, providing readers with reliable and practical advice to enhance their knowledge and skills. That's why millions of readers turn to us each year. Join us in celebrating the joy of learning, guided by standards you can trust.

Editorial Standards

At SmartCapitalMind, we are committed to creating content that you can trust. Our editorial process is designed to ensure that every piece of content we publish is accurate, reliable, and informative.

Our team of experienced writers and editors follows a strict set of guidelines to ensure the highest quality content. We conduct thorough research, fact-check all information, and rely on credible sources to back up our claims. Our content is reviewed by subject-matter experts to ensure accuracy and clarity.

We believe in transparency and maintain editorial independence from our advertisers. Our team does not receive direct compensation from advertisers, allowing us to create unbiased content that prioritizes your interests.

Horizontal diversification is one of several different types of diversification strategies that may be used by businesses as well as private investors to increase returns on their efforts. As it relates to a business, this type of diversification strategy involves the creation of products that may not be directly related to current products offered to consumers, but that are highly likely to still appeal to the company’s existing client base. This approach is somewhat different from other diversification methods, in that the focus is not on attracting new customers in different markets, but in offering a broader range of goods and services to a loyal customer base.

One example of horizontal diversification can be seen with a local retailer who has an established reputation for selling quality pieces of jewelry. As a means of increasing business, the retailer may decide to carry a line of scents in the shop. This approach creates opportunities to sell perfumes, cologne, and aftershave lotion to the patrons who already frequent the shop in search of quality jewelry for personal use or as gifts. When the strategy works, a customer who comes in to select a necklace as a birthday present may also notice the line of scents and choose to purchase a bottle of perfume along with the necklace, allowing the shop owner to earn a return from both product lines.

In many instances, a company that engages in horizontal diversification will conduct an in-depth evaluation of its current clientele, and determine what other types of products they may be willing to purchase while continuing to support the current product line. Often, factors such as location, gender, and income level will be taken into consideration when identifying new and different products to offer alongside the traditional product line. Typically, this approach is marketed to consumers as an additional benefit offered by a trusted business that allows those consumers to meet more than one need by buying a wider range of products from the business. Assuming that the new products meet the quality and price demands of the clientele, there is a very good chance that the approach will be successful and the company will enjoy greater profits.

While the concept of horizontal diversification offers a number of benefits to both the business and its clientele, there is also a potential drawback to consider. Since the focus is selling new products to the existing client base, this strategy does nothing to increase the scope of that base of customers. This means that any factors that adversely affect the buying power of those customers will also have an negative impact on the amount of sales generated. For this reason, many businesses will not rely on horizontal diversification alone, but will also seek to diversify in ways that attract consumers associated with different age, gender, and economic demographics.

SmartCapitalMind is dedicated to providing accurate and trustworthy information. We carefully select reputable sources and employ a rigorous fact-checking process to maintain the highest standards. To learn more about our commitment to accuracy, read our editorial process.
Malcolm Tatum
By Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing to become a full-time freelance writer. He has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also been featured in poetry collections, devotional anthologies, and newspapers. When not writing, Malcolm enjoys collecting vinyl records, following minor league baseball, and cycling.
Discussion Comments
Malcolm Tatum
Malcolm Tatum
Malcolm Tatum, a former teleconferencing industry professional, followed his passion for trivia, research, and writing...
Learn more
SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.

SmartCapitalMind, in your inbox

Our latest articles, guides, and more, delivered daily.