Question

A tailor specializes in Formal work attire is planning to divesify its product to tackle the low-profit during this pandemic.

What are the possible product diversification strategy?

Answer 1

The pandemic has disrupted lives so drastically that everyone is being forced to think out of the box. Small and Medium Scale Enterprises (SMEs) are among the worst-hit segments of the economy. As more and more people are choosing to work from home, the demand for formal attire that people usually bought for wearing to the workplace is likely to show a declining trend. Manufacturers of formal wear must look to diversify offerings for avoiding going out of business. Product diversification allows a firm to expand its product base, creating greater flexibility in the light of changing market conditions.

In our case, the tailor needs to re-strategise and think of diverting the existing input (clothing material) to produce products that possess some utility during the current times. For instance, the fabric used for making formal wear can be used for making masks instead. Masks are being touted as the most effective way to prevent Covid-19 by doctors across the globe and so their demand is likely to surge in the near future. No additional costs will be incurred in creating the masks as all the fabric, elastic, buttons used in formal wear can easily be utilised in making masks of different sizes and shapes. Thus, diversifying the business into making masks will not only improve sales but also reinforce the importance of wearing masks as a preventive measure to avoid the disease.

Secondly, as most people are working from home and meetings are being conducted online, shifting production from formal wear to business casual is likely to work for the tailor in the short-run. Shifting production from formal shirts to casual shirts, which are shorter than formal shirts and so use less material, can help revive sales. Also, this move is likely to capture a newer market segment comprising of people who have always preferred business casual over formal casual.