Which model includes Market Penetration, Market Development, Product Development, and Diversification as growth strategies?

Which model includes Market Penetration, Market Development, Product Development, and Diversification as growth strategies?

• A. BCG Matrix
• B. Ansoff Matrix
• C. SWOT Analysis
• D. Porter's Five Forces

Answer: (B)

The idea being tested is how a company grows by changing its products and markets, and which framework organizes those options. The four options described—using existing products in existing markets, existing products in new markets, new products in existing markets, and new products in new markets—are exactly the four growth strategies of the Ansoff Growth Matrix. Market Penetration means boosting share with what you already offer in the markets you already serve. Market Development means taking your current products into new markets. Product Development means creating new products for the markets you already serve. Diversification means launching new products in new markets. As a scale of risk, penetration is typically the lowest, while diversification is the highest because it involves both new products and new markets. Other models focus on different concepts—portfolio analysis (BCG Matrix), internal/external factors (SWOT), or industry structure (Porter’s Five Forces)—and they don’t categorize growth options in these four product/market combinations, so they don’t fit the described framework.

The idea being tested is how a company grows by changing its products and markets, and which framework organizes those options. The four options described—using existing products in existing markets, existing products in new markets, new products in existing markets, and new products in new markets—are exactly the four growth strategies of the Ansoff Growth Matrix.

Market Penetration means boosting share with what you already offer in the markets you already serve. Market Development means taking your current products into new markets. Product Development means creating new products for the markets you already serve. Diversification means launching new products in new markets. As a scale of risk, penetration is typically the lowest, while diversification is the highest because it involves both new products and new markets.

Other models focus on different concepts—portfolio analysis (BCG Matrix), internal/external factors (SWOT), or industry structure (Porter’s Five Forces)—and they don’t categorize growth options in these four product/market combinations, so they don’t fit the described framework.