Product proliferation
Encyclopedia
Product proliferation occurs when organizations market many variations of the same product
s. This can be done through different colour combinations, product sizes and different product uses. This produces diversity
for the firm as it is able to capture its sizable portion of the market. However, it can also be considered that marketing so many new products leads to economic resources being wasted; the consumer
becomes confused and mistakes are made in the purchase of products.
Product proliferation is often used by incumbent firms as method of entry deterrence
. By developing a large variety of products, the incumbent firm is able to occupy gaps in the market that potential entrants may have exploited, thus reducing the threat of competition.
The very dynamism of product proliferation makes it hard to manage. Complexity is spawned by an ever-changing landscape of customer demand and companies' attempts to meet that demand with configurable products and more product variations.
Product proliferation can sometimes also lead to cannibalisation of the existing product line of the company and should be justified by overall increase in market share
.
Product (business)
In general, the product is defined as a "thing produced by labor or effort" or the "result of an act or a process", and stems from the verb produce, from the Latin prōdūce ' lead or bring forth'. Since 1575, the word "product" has referred to anything produced...
s. This can be done through different colour combinations, product sizes and different product uses. This produces diversity
Diversification (marketing strategy)
Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most...
for the firm as it is able to capture its sizable portion of the market. However, it can also be considered that marketing so many new products leads to economic resources being wasted; the consumer
Consumer
Consumer is a broad label for any individuals or households that use goods generated within the economy. The concept of a consumer occurs in different contexts, so that the usage and significance of the term may vary.-Economics and marketing:...
becomes confused and mistakes are made in the purchase of products.
Product proliferation is often used by incumbent firms as method of entry deterrence
Strategic entry deterrence
In business, strategic entry deterrence refers to any action taken by an existing business in a particular market that discourages potential entrants from entering into competition in that market...
. By developing a large variety of products, the incumbent firm is able to occupy gaps in the market that potential entrants may have exploited, thus reducing the threat of competition.
The very dynamism of product proliferation makes it hard to manage. Complexity is spawned by an ever-changing landscape of customer demand and companies' attempts to meet that demand with configurable products and more product variations.
Product proliferation can sometimes also lead to cannibalisation of the existing product line of the company and should be justified by overall increase in market share
Market share
Market share is the percentage of a market accounted for by a specific entity. In a survey of nearly 200 senior marketing managers, 67 percent responded that they found the "dollar market share" metric very useful, while 61% found "unit market share" very useful.Marketers need to be able to...
.