Which strategy involves developing new products in new markets?

The strategy that involves developing new products in new markets is diversification. This approach is characterized by a company expanding into new areas that are different from its existing operations. In doing so, the firm not only introduces new products to the market but also targets new customer segments or geographical areas. This strategy can help reduce risk by spreading investments across diverse activities and can lead to new revenue streams.

In contrast, market development focuses on taking existing products into new markets, without the development of new products. Product extension involves enhancing or modifying existing products for the current market, while market penetration is about increasing market share with existing products in existing markets. Thus, diversification stands out as the strategy that fully encompasses the introduction of new products in conjunction with targeting new markets.