A New Product Introduced By Company

When a company’s product lines compete with one another this is called cannibalization. The cost of cannibalization should be included in estimating the new product’s cash flows.

An industry product can be substituted by a substitute product which has the same or similar function by a different means. A substitute can limit industry profitability and growth. Porter (2008) gives several key elements on determining the threat.

In a monopolistically competitive industry, the goods sold, while not perfect substitutes, can be viewed as acceptable substitutes by most people. As a result, if Firm A raised the price of its good substantially, consumers would decrease the quantity demanded from Firm A and would move to other firms selling similar products. As a result, Firm A would sell few units at the new higher price. As the quantity a firm sells falls, so does its percentage of sales in the industry, also

Imagine you are part of a strategic planning group at a large corporation that is considering developing a new proposed product. The marketing director has asked your team to do a competitive market analysis to determine the product’s potential success. The analysis will focus on your primary competitor in the product’s market.

Patents are, “a limited duration property right relating to an invention”, (“United States Patent And Trademark Office”). Mylan has, “four EpiPen patents do not expire until 2025”, (Emanuel 2). When patents are granted to a single firm, it gives them a huge advantage over other firms in a respective industry. In Mylans case, many companies know how to replicate EpiPens at a cheaper price, but any firm that attempts to copy it could be jailed. Essentially, patents are a form of market power and in Graph ‘A’ one can see the negative effects of market power (consumer’s perspective) in the epinephrine industry. Conversely, Graph ‘B’ shows what the industry for epinephrine would look like if Mylan did not have market power. Let’s say there were no patents granted to any firm in the epinephrine industry, this would result in many sellers due to neither firm having market power. Without a unique good Mylan’s EpiPen would become easy to replicate and thus become homogenous. With the increase in sellers, demand would become perfectly elastic (horizontal line) due to Mylan having less influence in the industry. These characteristics form part of what is known as perfect competition. “economists say that an industry is competitive (or sometimes “perfectly competitive”) when firms don’t have much influence over the price of

Further reactions from competitors could be to provide cheaper alternatives that may appear similar to the offering provided by the Vigor brand. The result of this could be possible price wars to obtain market

This forecast needs to show that Techsonic will make money from introducing this new product to the market. If there is a substantial positive difference in the EBI&T and total capital expenditures, Techsonic will show profits.

Toothpaste manufacturers depend on outside sources for their caps, tubs, and ingredients to produce toothpaste. If for some reason one of these items are not available it may affect production of the item. Because of this, supplies depend heavily on their outside sources and have a huge impact on the production of the product. There is a high level of competition amongst suppliers which aids in reducing the prices to producers. Reducing the prices to producers also reduces the price to consumers. There are many suppliers in this market which allows multiple firms to prosper without stealing market from another business. As a consumer in this market, if one company has issues collecting materials, increases prices, or alters the quality of the item, I am always able to switch over to another brand.

* Also, the competitors’ new product was highly competitive in thermal resistance parameter which would make it difficult for MM to compete in segments B and C

A company named Goodbite has made a decision on launching a new product in the oral care market. They are interested in selling a teeth whitening strip with an advance scheme. The teeth whitening strips are small, elastic and can be adjusted to the surface of your teeth, being left in the mouth for several minutes helps on facilitating a whitening effect. The Goodbite’s product focuses on uniqueness by trying to select some attributes that might be considered as important. Its main competitive advantage focuses on product differentiation, which “deals with making changes in the marketing mix of a product so as to differentiate it from whatever the competition is offering” (“Product Differentiation”). The company differentiates from the

The threat of substitutes is the availability of a product that the consumer can purchase instead of the industry’s product (Free management books, n,d ). A substitute product is a product that produced by other industry and offer similar benefits to the customer as the product produced by the firms within the industry. The threat of substitutes can affect the competitive environment for the firm in that industry and also influence the profitability of the industry. This threat affects profitability of the industry because the consumers can choose to purchase similar product from other industry to instead of the company’s product. Besides that, the more the close substitute product can make the industry more competitive and decrease the profit potential of the firm in the industry whereas the less the close substitute product can make the industry less competitive and

            Other environmental influences, such as competition, may fuel the company’s desire to create more and better products that could well determine their location and standing in the global market. Increase in the number of competitors for the same line of products may mean that there

The threat of substitutes: where it refers to substitute product as those that are available in other industry which can also fulfil the need and want of the consumers. It can affect competition in an industry by placing an invisible ceiling on prices which companies within the industry can charge, due to the fact that if the cost of substitute is low then the consumers will tend to purchase substitutes, therefore limiting the prices that a company can place on certain items to gain maximum profit. For example, lemonade can be substituted for a soft drink. Generally, competitive pressures arising from substitute products increase as the relative price of substitute products declines and as consumer 's switching costs decrease.

However, competitors do not always conform to theoretical models. Some will always compete on brand first and leave it to others to build market interest for the product form. Arguments can also be made that competitors will respond differently than what the PLC suggests on such issues as pricing, number of product options, spending on declining products, to name a few.

The objective is to determine the most profitable (revenue minus cost) product based on its attributes relative to the market but also accounting for what the competition is selling comparably. Because of the complexity there are a great deal of parameters to take into consideration as part of the “game form” including the number of manufacturers in the market, number of products offered by the manufacturer, number of products on the market, number of segments in the market, engineering costs of a given product by a manufacturer, market demand for a given product, market share of the manufacturer (brand influence), and the probability of another manufacturer producing a similar product. One assumption factored into the game is that strategically a competitor would consider not entering a market (production of a given product) saturated with similar products.