Product diversification is crucial for several reasons: 1. Risk Mitigation: By diversifying, businesses can spread their risk across multiple products. This helps in cushioning the impact if one product fails. 2. Market Expansion: Diversifying allows a company to enter new markets and attract different customer segments. 3. Revenue Growth: It opens up new revenue streams and can significantly boost a company’s overall growth. 4. Competitive Advantage: By offering a wider range of products, businesses can gain a competitive edge over their rivals.