What type of diversification involves offering products that are different but appealing to existing customers?

Horizontal diversification refers to a strategy where a company expands its product line by introducing new products that are distinct but still appealing to its existing customer base. This can be understood as adding variety to the current offerings without venturing into completely different markets or customer segments.

For example, a company known for manufacturing sports shoes might diversify horizontally by introducing sports apparel or accessories. This diversification is advantageous because it allows the company to leverage its existing brand loyalty, customer knowledge, and distribution channels while still attracting more business from its current customers who may be interested in the new products.

Concentric diversification, on the other hand, involves developing products that are related to the existing product line but not necessarily different, focusing more on synergy than customer appeal. Conglomerate diversification expands into products that are completely unrelated to the current offerings, targeting new markets. Retrenchment doesn't involve diversification; instead, it refers to reducing the scale or scope of operations. Each of these options highlights different aspects of diversification, but horizontal diversification specifically targets existing customers with diverse product offerings.