SMG MK 323 Lecture Notes - Lecture 12: Capri Sun, Lemonade, Revamp
Document Summary
12. 1 changing consumer needs (why firms create new products) Sometimes firms can identify problems or develop products customers never knew they needed. Customers enter new stages in their lives that intensify the demand for such innovations. 12. 2 market saturation (why firms create new products) The longer a product exists in the marketplace, the more likely it is that the market will become saturated. Without new products, the value of a firm will ultimately decline. Ex: this is why car companies revamp their models every year. Saturated markets offer opportunities for companies that are willing to adopt a new process or mentality. 12. 3 managing risk through diversity (why firms create new products) Firms often create a broader portfolio of products which help them diversify their risk and enhance firm value better than a single product can. Firms with multiple products can better withstand external shocks like changes in consumer preferences or intensive competitive activity.
