Does it make more sense to focus on market diversification or product diversification,
or both?
“Diversification is a form of growth marketing strategy for a company. It seeks to increase
profitability through greater sales volume obtained from new products and new markets.
Diversification can occur either at the business unit or at the corporate level. At the
business unit level, it is most likely to expand into a new segment of an industry in which
the business is already in. At the corporate level, it is generally and its also very interesting
entering a promising business outside of the scope of the existing business unit”(Jefferson,
2009).
According to the definition of the Diversification Strategy we believe that Yunnan Baiyao
Company was focused on both market diversification and product diversification. We will
discuss the reasons from both market and products side.
•As for the market diversification: The Yunnan Baiyao Company attempting to the
international market, they established the oversea department and try to cooperate
with 3M company which from the United States. This cooperate opportunity with
the 3M company is a chance to bring the traditional Chinese herbal medicine into
the North American market.
•For the product diversification: The Baiyao was the original product of the Yunnan
Baiyao Company, and this product was for external use. As well as in recent years,
Yunnan Baiyao Company developed series of new products related the original
product Baiyao. Nowadays their new products included the internal use drug, such
as Baiyao Capsule and Gong Xue Ning; external use drug, such Baiyao Aerosol,
Baiyao Plaster and Baiyao Tincture.