Which growth strategy involves creating new products for new markets?

Which growth strategy involves creating new products for new markets?

• A. Market Penetration
• B. Diversification
• C. Product Development
• D. Market Development

Answer: (B)

Diversification means growing by offering new products to new markets. In the common growth framework used in IB Business Management, diversification is the only strategy that pairs a new product with a new market, unlike the others: market penetration stays with the same product in the same market; product development uses new products in the same market; market development uses the same product in new markets. Because both the product and the market are changing, diversification best fits the description of creating something new for an audience you’re not currently serving. It’s typically the most risky option, but it can also bring the biggest potential rewards if the new product meets the needs of the new market.

Diversification means growing by offering new products to new markets. In the common growth framework used in IB Business Management, diversification is the only strategy that pairs a new product with a new market, unlike the others: market penetration stays with the same product in the same market; product development uses new products in the same market; market development uses the same product in new markets. Because both the product and the market are changing, diversification best fits the description of creating something new for an audience you’re not currently serving. It’s typically the most risky option, but it can also bring the biggest potential rewards if the new product meets the needs of the new market.