When a business expands from offering just goods to also providing services, what is this process called?

The process of a business expanding from offering only goods to including services is known as service diversification. This term specifically refers to a strategic approach where a company broadens its product mix by incorporating services alongside its existing goods. By doing so, the business aims to better meet customer needs, enhance its competitive advantage, and possibly increase revenue streams.

Service diversification allows a company to adapt to changing market conditions and consumer preferences, offering additional value to customers that may not be covered by goods alone. It can also bolster customer loyalty, as businesses that provide a broader range of solutions are more likely to retain customers who seek convenience and comprehensive offerings.

Market penetration focuses on increasing sales of existing products in existing markets rather than expanding the product range. Market expansion relates to entering new markets with current or new products, rather than shifting the product mix. Product differentiation is about distinguishing a product from others in the marketplace, typically by unique features or benefits, but it does not encompass the addition of services to an existing goods-based offering. Therefore, service diversification aptly captures the strategic move to include services alongside goods in the business's offerings.