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IAI Actuarial Core Principles · Business Management · Mission, business strategy, teamwork and time management

Kaveri General Insurance wants to grow premium income. Management is considering selling its existing motor products to new customers in tier-3 towns through a newly appointed agent network, without changing the products. Using Ansoff's matrix, which growth strategy is this?

This is market development. In Ansoff's matrix, selling existing products to new markets, here motor cover in tier-3 towns, is market development. Penetration keeps existing markets, product development changes the product, and diversification changes both, so none of those fit the scenario.

  1. ADiversification
  2. BProduct development
  3. CMarket penetration in the existing customer base
  4. DMarket developmentCorrect
  5. Divestment

Explanation

Ansoff's matrix has four strategies. Existing products sold to new markets is market development. Market penetration would target existing markets with existing products, product development means new products for existing markets, and diversification is both new. Divestment is not an Ansoff growth option.

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