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Question: How did alpha ensure that mop achieved an increase in overall market share?

(Posted by: mady on 2010-07-27 10:13:12)

F a company launches two brands into the same market segment then they will take away sale~ from each other. However, if they are so positioned so that customers perceive the products as being decidedly different then the combined effect of having the two brands in the same segment can lead to substantial prohts. Alpha markets a soap powder called Cleen which has a 20 % share of a soap powder market segment. Five years ago it introduced a new soap powder called Scrub which was perceived by users to be very similar to Cleen. The result was that Cleen's share of the market segment dropped to 10 % as Scrub took 10 per cent of the market segment sales. Cannibalisation had occurred many people who normally bought Cleen had simply shifted their allegiance to Scrub. In this case Alpha actually was much worse off since it had incurred development and marketing costs on the new product Scrub and was now spending more money marketing the two products than it had previously done in just marketing Cleen. In addition there were also extra production costs involved. Altogether this was a marketing fiasco and Alpha quickly rectified the situation by withdrawing Scrub from sale. Two years ago Cleen had regained its 20 % share of the market segment and Alpha decided once again to launch another brand alongside Cleen. This time it made sure that the soap powder was perceived to be signifìcantly different by potential users. The new product's name is Mop and it now has a 15 % share of the same market segment as Cleen. Cleen has only dropped two points off its origjnal share of the r narket segment which now stands at 18 per cent. Adding the two market shares together now means that Alpha has a 33 % share of the market segment. The additional costs of having two brands in the market segment have been more than recovered and the firm's prohtability has been increased substantially.