Sunday, February 7, 2010
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.