The paper "Product Proliferation and Market Size" is a good example of marketing coursework. Product proliferation refers to the development or increase of the number of product offerings in the market by existing producers (Jones and Hill 2009). Producers achieve this by varying the different aspects of the product category such as its colour, size and usage. It is a market strategy that usually very common in oligopolistic markets where the number of competitors is relatively low (Lambertini 2008). Due to this low number of competitors, the actions of one firm affect that of a competitor firm.
One major feature of product proliferation is that the competition is not in the pricing strategies of the products; rather it is usually in other strategies and product proliferation is one of such strategy (Tseng and Piller 2007). Product proliferation does affect consumers and organisations differently depending on how it is carried out (Peng 2008). Product proliferation and Market Size It is consumer nature to always try out a variety of products in a bid to find the right product that meets their needs (Peng 2010).
Organisations thus spend a lot of money doing market research on consumers like and dislikes and this leads to the production of a variety of the same products enabling consumers to have a wide array of products from where to choose (Lamb and McDaniel 2008). The days when organisations used the one-size-fits-all strategy to gain market share are long gone. Many organisations are in the field of product customization today since consumers are different in their needs and wants (Menil, Portes and Sinn 2009). Product proliferation allows the organisation to diversify on its products thereby casting a wide net over current consumers as well as any potential customers (Rao 2009).
As this customer base grows, the organisation’ s control of the market share grows in tandem. Broadening a product line through a line extension increases the extending brand’ s market power thereby increasing the sales and margins of both the extending and rival firms (Kadiyali et al. , 2006). Costs of Product proliferation The costs that come with product proliferation can however not go unnoticed. The numbers of new products that organisations have introduced to the market have continued to increase exponentially over the years (Piller 2010).
Most organisations want to grow in volume and enjoy the benefits of economies of scale. They thus approach this by increasing the number of products produced and, in most cases overlook the cost implications. This strategy has thus had fundamental and adverse effects on organisations, built complexities that have added on the overall cost of production. These costs can be attributed to increased operating costs as a result of changeovers, deadline costs and overtime. Operation costs are entrenched in the production and they change the essential economy of the organisation (Drury 2005). Operation costs are however not the only costs incurred in product proliferation.
New products would require promotions to market them and, the more products there are the more the finances spent on promotional activities. This leads to sales being time-consuming and difficult to manage (Capon 2008).
Bayus, B. and Putis, W. 2006. Product Proliferation: An Empirical Analysis of Product Line Determinants and Market Outcomes. Marketing Science, 18(2): 137-153
Nkwocha, I., Bao, Y., Brotspies, H. and Johnson, W. 2005. Product Fit and ConsumerAttitude toward Brand Extensions: The Modelling Role of Product Involvement. Journal of Marketing Theory and Practice, 13(3): 49-61
Kahn, K. 2011. Product Planning Essentials. New York: M.E Sharpe.
Nachum, L. and Wymbs, C. 2005. Product Differentiation and External Economies: M&As in Global Cities. Journal of International Business Studies, 36(4): 415-434
Rao, A. and Mahi, A. 2003. The Price of Launching a New Product: Emprical Evidence on Factors Affecting the Realtive Magnitude of Slotting Allowances. Marketing Science, 22(2): 246-268
Watson, R. 2009. Product Variety and Competition in the Retail Market. The Journal of Economics, 57(2): 217-251