Sunday, February 7, 2010

Diversification



Diversification is a strategy for company growth through starting up or acquiring businesses outside the company's current products and markets (p.44 Kotler) This means that a company is developing new markets and new products.

I first found about McCafe in Japan and was amazed by its different style from traditional McDonald store. I found more information online at McCafe's website. http://www.mccafecoffee.com/

McDonald's starting of McCafe is an excellent example of diversification. By starting McCafe, McDonald's is offering new products that were not available in traditional McDonald's stores. McCafe specializes in serving cafes, which attracts customers that usually don't come to McDonald's to eat fastfood. McCafe is also not only a product development. McCafe has its own section of the store and clearly distinguishes itself from the traditional McDonald store. The store has modern, yet relaxing mood. This is important to attract new market segments, probably customers that go to cafe not to satisfy hunger, but possibly to take a sip of coffee and chat in a relaxing environment. Thus, McDonald's McCafe serves as an example performing diversification by developing both new products and new markets.

Shogo Okuda
Section G

5 comments:

  1. I've read that this strategy of McDonald's is posing a threat to Starbucks because now customers are able to get higher-quality McCafe coffee for a slightly lower price. It will be interesting to see how successful McDonald's is at gaining market share in this segment and what Starbucks intends to do to counteract this strategy.

    -Karlyn Kurokawa, Section E

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  2. The coffee market has really seemed to take off within the last few years. A lot of companies are offering coffee at a lower price in order to compete with companies like Starbucks or Pete's. Some of Starbucks' main competitors, such as 7-Eleven and Dunkin Donuts, in the coffee market do offer lower prices. With the economy and people cutting down on their spending, I'm curious to see if Starbucks will lower their prices or create a different pricing strategy.
    Source: http://online.wsj.com/article/SB123715865010235141.html

    -Kenichi Sato, Section G

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  3. excellent example..it makes me to understand better about diversification.

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