ITPEC IP April 2019 Question 83
When enterprise strategies are classified into four (4) categories: “market penetration,” “new product development,” “market development,” and “diversification” according to whether each of a product and a market is an existing one or new one, which of the following corresponds to a “market penetration” case?
Explanation
A commodity maker adding floor sales staff to sell more of its core products — market penetration keeps both the product and the market as they are.
Ansoff's product-market matrix sorts growth strategies by whether the product and the market are existing or new:
In (d) the core products are existing and are sold in the same shops to the same customers; only the sales effort grows.
Answer (d)
Why not others:
- •(a) — a beverage maker breeding a new species of flowers offers a new product in a market new to it: diversification
- •(b) — a casual apparel maker selling business suits adds a new product line: new product development
- •(c) — taking the same food products from a local area to the whole country opens a new market: market development
Key rule: Classify each case on two axes, product new or existing and market new or existing; penetration is the only quadrant where nothing is new.
Business Strategy Management · AI-written, may contain errors
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