Question

Louis Vuitton is about to introduce a new item to its line of women’s shoes. What three places can the unit sale for the new item come from that can affect the net impact on the company’s own margins?

The new Fresh-Cola product by Fresh-Cola Inc., a manufacturer of carbonated drinks, has just been introduced. What patterns develop during this phase of the product life cycle?

Answer 1

Louis Vuitton sales can be impacted if
1. There's a luxury brand in the market already having good brand image , who plans to diversify it's business into women footwear
2. Any competitive brand expanding it's business in those areas where Louis Vuitton planned to target
3. The existing shoes of the Louis Vuitton have built up the customer loyalty and thus the new product is unable to replace the earlier ones.
These three sources can negatively impact the sales revenue as well as the profit margin of the introduction of the new product in women's shoes category.

The phase that is discussed in the question is "INTRODUCTION PHASE" of the Product Life Cycle. During this phase the firm performs various tasks like developing the idea , testing of the market, market research , marketing the product and building its brand and quality. The patterns that are observed during this phase include building awareness through publicity, high costs with low profits, aggressive marketing, using price penetration ( high competition) or price skimming policy ( low competition) and product differentiation. Distribution is also through selective channels until consumers show positive response.