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New Products in Existing Markets

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The ever-changing market opens up a plethora of opportunities for competitors. Customers needs and wants constantly alter, bringing about a change in demand and supply. Stein says that industry competitors must be cognizant of new customers entering their market, while employing organizational strategies that exploit those entrants. An increasingly expanding market generates challengers seeking to make a competitive move through positioning or placement of new products. Introducing new products in the same segment with existing products is a good idea, but firms must proceed with caution. Many firms can add products to its existing product lines in order to create variations in different market segments. Stein says that at the SBU level, firms can add complementary and supplementary products to its main products to “round out its product lines.” Complementary products are ones that can be used concurrently with other products, while performance and quality are upgraded in primary products through the manufacturing of supplementary products. Adding new products to an existing product line will access a larger range of market segments. The idea is to position the product aggressively against the “less well-positioned” competitors in order to promote rapid growth. This rapid growth will increase a firm’s market share and will benefit its long-term goals. Following its entrance into the segment, firms should employ a penetration strategy to further saturate itself into the market segment. This low price strategy encourages instant penetration into the market and is a barrier to entry for competitors. Nonetheless, it involves “opportunity costs in the form of forgone profits.” This is where a firm must be cautious. It must be mindful of whether it is prepared or even can afford to put money into a market segment that isn’t performing. The question it should ask

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