Some competitors proliferate products around the heart of the market

Symptom: Competitors are proliferating products around the heart of the market price point.

Implications for the market:

  • Each competitor hopes to escape competition and win incremental volume and margins by introducing slightly modified versions of the standard product.

  • The proliferation of products usually aids dominant competitors by making it more difficult for smaller and weaker competitors to gain or hold shelf space.

  • But product proliferation raises costs and increases the risk of failure for all competitors, including the dominant companies.

  • Product proliferation raises the cost of competition by increasing complexity and the minimum number of products that competitors must offer. This increased complexity can squeeze the margins of even the dominant players.

Recommended Reading
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Perspectives: Conclusions we have reached as a result of our long-term study and observations.

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