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in the business field when the company want to enter the market with the new product and to win of customer trust and overcome the competition so the company decided to enter the market with product new has the same specification and quality and price less than a brand product and this strategy led to increase the Sales to very good level and get more customer and trust but the company now need to boost the price because the profit very little and the company need more profit to guarantee continue in the market so when boost the product price this led to the sales becoming less too much and the customers have returned to the famous brand because the price has become Converges to the price of the famous brand product, so what is the solution in this case.
Let me use an existing example on the market of where new players are trying to break into a space dominated by huge MNCs.
I guess this is the same issue that new mobile phone providers such as Xiaomi and Oppo are facing. They entered the market with products offering the same features as established competitors' high-end products at a much lower entry price. In my opinion, that's just a brand building exercise to get the general public used to the idea of buying a Xiaomi or Oppo phone. Establish the quality by getting the product into the consumer's hands. They have also cut a lot of costs by not using traditional marketing channels and are very targeted in their role-out focusing on countries with large population bases (the volume play does help).
To increase profit will be the next phase and this can be done through the next generation of their phones. You have already established the quality of your product, now it is time to diversify and create spin-offs that cater to specific target markets.
Hi Ahmad,
You can't at this time and maybe for the life cycle of the product increase its price with the same specification and quality. Unless, otherwise the law of demand & supply favors you.
Your company's concern is to increase x% profit of the product, you can do this by streamlining your internal processes without increasing the product market price. By eliminating unnecessary waste in your production processes you can convert that wastes into savings. Take note that profit is directly proportional to the total expenses of the product, production cost is one of them. And in real world, there are so many kinds of wastes in production, i.e, idle time (waiting) between process steps, repair or scrap due to poor quality, inventory (over production), overburden, etc. If you can't minimize (or can't stay on the acceptable ratio) this wastes generates huge amount of cost even to the point where your product's market price is not enough to cover your product cost.
There are lots of Quality Management/Control/Assurance/Tools or methodology available everywhere that you can benchmark to address this issues. You may refer to TQM, Six Sigma, Just-In Time Production system, KAIZEN, ISO9001, etc.
Hope this makes sense.
Cheers!
Rocky
In this case, there can be only two parameters on which New product can regain market,
1) Service - Service is the most critical parameter after sales. Not only does it act as market differentiator but market expander. I have seen many established brands loose their focus on service once their sales figure increases, whereas many new brands not only retain but expand the sales because of their service.
2) R&D - Focus should never be lost on upgradation of the product specifications and making it compatible with multiple platforms. Without focus on R&D it is difficult to retain market with only lower pricing.
How it is possible, let me know.
