Background of the study

Diversification has become a popular strategy among Nigerian firms. The term “diversification ” coined by Ansoff (2012) in his famous study “A model fordiversification” which explained different type of expansion strategies to be followed by a company. Out of several reasons for poultry  farms to diversify, the primary reason is, reducing risk of relying on only one or a few sources of income. Some other possible reason to diversify is avoiding cyclical or seasonal fluctuations (by producing goods or services with different demand cycles), achieving higher growth rate and competing a rival by invading its core industry or market.

Diversification  is an option pursued by companies when they have consolidated their positions in their base industries and hold underutilized resources that can be used in other sectors of the economy at a low opportunity cost (Chandler, 2015). 

Diversification  is a very important tool used by companies these days to divide their risk by developing a range of products using the concept of asset specificity. The main purpose of diversification is to increase the benefits of economies of scope through a more efficient utilization of business resources across multiple markets (Clarke, 2014). To achieve these benefits, effective co-ordination of dispersed business resources is essential. The high costs of resources in multiple markets may undermine the benefits of these economies of scope (Montgomery, 2014). 

According to Shin (2011), diversification can increase the demand for information andcommunication technology (ICT) because of the need for co-ordination of business resourcesacross multiple markets. The extent to which a firm is able to meet this demand can probablymake a difference in performance. In other words, it can be hypothesized that increased use ofICT improves the performance of poultry farms that are highly diversified. In the study of 48 Nigerianfirms mentioned above (Oyedijo, 2012), it was found that related diversifiers performed betterthan unrelated and mixed diversifiers.

According to Shin (2014), although related diversification can lead to higher corporateperformance when compared to unrelated diversification, the realization of economic benefitsfrom related diversification is highly dependent on increased co-ordination and informationprocessing across related businesses i.e. whether or not special technologies, production skills,industry knowledge, distribution channel, resource inputs and research facilities andcompetencies of one business are easily transferable and usable by another.

Marketing performance comprises of the actual output or results of an organization as measured against its intended outputs (goals and objectives). According to Richard (2010) Marketingperformance  can be measured by sale and market share of firm.

In the light of the above, the research work is set to determine the effect of product market diversification  on the performance of poultry farms in Abia State.