ITPEC IP October 2020 Question 82
When the market development strategy, market penetration strategy, product development strategy, and diversification strategy that represent the growth strategy of a company are positioned in four (4) cells of a matrix formed by existing markets and new markets, and existing products and new products, in which cell is the market penetration strategy positioned?
Explanation
A: existing products in existing markets — market penetration sells more of what the company already makes to the markets it already serves.
Ansoff's growth matrix classifies growth strategies by whether the market and the product are existing or new:
Market penetration raises market share or usage with the current products, for example through promotion, pricing or encouraging more frequent purchase.
Answer (a)
Why not others:
- •(b) B — new products for existing markets is product development
- •(c) C — existing products taken to new markets, such as new regions or customer segments, is market development
- •(d) D — new products in new markets is diversification, the cell with the highest risk
Key rule: Read the two axes separately: penetration is the only cell where both market and product are existing, diversification the only one where both are new.
Business Strategy Management · AI-written, may contain errors
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