MARKETING MANAGEMENT - Product Mix Decisions
Application exercise - Product Mix Decisions
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Go to the area of your town that has a number of restaurants. Compare the product mix of one with the other.
Application exercise
Go to the area of your town that has a number of restaurants. Compare the product mix of one with the other. Are there any differences in width or depth? How could they stretch their lines?
When the sales of the firms new products are due mainly because of decreasing sales of its existing and established product then we say that cannibalization has occurs in brief we can say by this you are actually eating away your own market.
A good example of it would be Hyundai Santro they have introduced Santro Xing as a new product in the market in other way they have cannibalized their own market, like a person who wanted to buy Santro old model will buy Xing as it latest so they are not capturing new customer but converting their own customers.
Only if they are able to make a person buy their product where he was planning to buy some product of Maruti then it is not cannibalization. If you want to avoid cannibalization, the new product should not be identified too closely with established products. Instead it should be targeted with new appeals to different market segments. Cannibalization is desirable when margins on new products are higher than those on established Products. In highly competitive industries, it is often desirable to induce target customers to trade up to the firm’s newer products.
This strategy is adopted by Videocon International, Which entered the market with a low priced color TV with basic features and then introduced more sophisticated models up the price scale in order to ensure that customers in all segments would buy only Videocon products.
Go to the area of your town that has a number of restaurants. Compare the product mix of one with the other. Are there any differences in width or depth? How could they stretch their lines?
Another concept, which is very important and should be know to you, is cannibalization:
When the sales of the firms new products are due mainly because of decreasing sales of its existing and established product then we say that cannibalization has occurs in brief we can say by this you are actually eating away your own market.
A good example of it would be Hyundai Santro they have introduced Santro Xing as a new product in the market in other way they have cannibalized their own market, like a person who wanted to buy Santro old model will buy Xing as it latest so they are not capturing new customer but converting their own customers.
Only if they are able to make a person buy their product where he was planning to buy some product of Maruti then it is not cannibalization. If you want to avoid cannibalization, the new product should not be identified too closely with established products. Instead it should be targeted with new appeals to different market segments. Cannibalization is desirable when margins on new products are higher than those on established Products. In highly competitive industries, it is often desirable to induce target customers to trade up to the firm’s newer products.
This strategy is adopted by Videocon International, Which entered the market with a low priced color TV with basic features and then introduced more sophisticated models up the price scale in order to ensure that customers in all segments would buy only Videocon products.
Tags : MARKETING MANAGEMENT - Product Mix Decisions
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