Maverick Systems was a leader in the phone market and profits from its cell phones were very high.Maverick Systems developed a new generation smartphone and has been advised by a consulting firm to "embrace cannibalization." This means that the company should:
A) introduce the new technology right away and increase its market lead while taking away profits from its present product.
B) delay introduction of the next generation product until profits have begun to significantly decrease for the current product.
C) use up most of its financial resources in promoting the new phone.
D) wait for the previous cell phone to become obsolete and then introduce this new phone into the market.

Question

Quizplus · Accepted Answer

Embracing cannibalization means introducing a new product that competes with the existing one, even if it means taking away profits from the current product. By introducing the new generation smartphone right away, Maverick Systems can increase its market lead and stay ahead of its competitors. Delaying the introduction of the new product or waiting for the current product to become obsolete would put the company at risk of losing market share and profits to competitors who may introduce similar products earlier. Using up most of its financial resources in promoting the new phone may not be the best strategy, as the company will need to have enough funds to maintain operations and invest in future product development.

Maverick Systems Was a Leader in the Phone Market and Profits