The Relationship Between Product Diversification and Small Business Profitability: A Study of Retail Businesses in Sokoto State
- Project Research
- 1-5 Chapters
- Abstract : Available
- Table of Content: Available
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- NGN 5000
Background of the Study
Product diversification is a strategic approach used by businesses to mitigate risks, attract a broader customer base, and enhance profitability. In the retail sector, diversification can involve expanding product lines or introducing complementary goods and services (Kotler & Keller, 2024). For small businesses in Sokoto State, product diversification presents an opportunity to navigate market challenges and increase revenue streams.
Retail businesses in Sokoto State operate in a dynamic environment characterized by fluctuating consumer demands and intense competition. While diversification offers potential benefits, it also requires careful planning and resource allocation to avoid overstretching business capacities (Usman & Aliyu, 2023). This study investigates the relationship between product diversification and small business profitability in the retail sector of Sokoto State.
Statement of the Problem
Many small retail businesses in Sokoto State struggle with profitability due to limited market reach, changing consumer preferences, and competition from larger retailers. Product diversification is often proposed as a solution, but its impact on profitability remains underexplored, particularly in the local context (Bello & Ibrahim, 2024).
Existing research has largely focused on large-scale enterprises, leaving a gap in understanding how small retail businesses in Sokoto State can leverage product diversification for profitability. Addressing this gap is crucial for enhancing the performance and sustainability of small businesses.
Objectives of the Study
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To identify product diversification strategies adopted by retail businesses in Sokoto State.
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To analyze the relationship between product diversification and profitability in small businesses.
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To evaluate the challenges of implementing diversification strategies in retail businesses.
Research Questions
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What product diversification strategies are adopted by retail businesses in Sokoto State?
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How does product diversification influence the profitability of small businesses?
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What challenges do small retail businesses face in implementing diversification strategies?
Research Hypotheses
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Product diversification does not significantly influence small business profitability.
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Retail businesses in Sokoto State do not commonly adopt product diversification strategies.
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Challenges in implementing diversification strategies do not significantly affect business profitability.
Scope and Limitations of the Study
The study focuses on retail businesses in Sokoto State, analyzing their product diversification strategies and profitability. Limitations include variability in business sizes and access to detailed financial data.
Definitions of Terms
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Product Diversification: The process of expanding product lines or introducing new products to a business portfolio.
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Small Business Profitability: The ability of small businesses to generate financial gains from their operations.
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Retail Businesses: Enterprises involved in the sale of goods directly to consumers.
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