Horizontal diversification is a business strategy where a company expands its product or service offerings to include new items that are related to its existing products. This approach allows a company to reach new customers and markets while leveraging its current capabilities and resources. For example, a soft drink company might introduce a new line of fruit juices to attract health-conscious consumers. This strategy can help reduce risks by spreading them across different products, making the business less vulnerable to market fluctuations. Additionally, horizontal diversification can enhance brand recognition and customer loyalty, as existing customers may be more likely to try new products from a familiar brand.