Table 13.5 sets out a product-market structure that identifies the importance of cost as a component of success. A tight niche product, newly invented and satisfying customer needs, has a relatively low direct cost for its entry. Assuming the entrepreneur builds qual¬ity into the product and uses "sweat capital" to introduce it to the market, there is a relatively low initial cost. As the market increases to include niche islands, the early adopters, costs in-
crease to cover brand and selling expenses. In the final growth stage where the product is in¬troduced to a broader market the total expense increases dramatically.
It is likely the new venturer would experience some difficulty launching the venture immediately into the broad market without adequate funding to cover the introductory and learning curve costs.
An innovation product challenges existing products already in position. By starting in a narrow niche, perhaps geographically, the costs to develop a brand identification, while re¬quiring time, are lower than would be the case if entry was made to the larger market. The effort here would require much investment to cover the branding process: advertising, pro¬motions, endorsements.
TABLE 13.5
A "me-too" product presents a hard entry situation. Costs are bound to be high with lower margins in this scenario, which is not a desirable position to start from
Table 13.5 sets out a product-market structure that identifies the importance of cost as a component of success. A tight niche product, newly invented and satisfying customer needs, has a relatively low direct cost for its entry. Assuming the entrepreneur builds qual¬ity into the product and uses "sweat capital" to introduce it to the market, there is a relatively low initial cost. As the market increases to include niche islands, the early adopters, costs in-
crease to cover brand and selling expenses. In the final growth stage where the product is in¬troduced to a broader market the total expense increases dramatically.
It is likely the new venturer would experience some difficulty launching the venture immediately into the broad market without adequate funding to cover the introductory and learning curve costs.
An innovation product challenges existing products already in position. By starting in a narrow niche, perhaps geographically, the costs to develop a brand identification, while re¬quiring time, are lower than would be the case if entry was made to the larger market. The effort here would require much investment to cover the branding process: advertising, pro¬motions, endorsements.
TABLE 13.5
A "me-too" product presents a hard entry situation. Costs are bound to be high with lower margins in this scenario, which is not a desirable position to start from
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