BioSense Prosthetics Inc.was a leader in the prosthetics market and was earning very high profits.The firm developed a new computerized prosthetic arm that would render its previous models obsolete.It decided to withhold the new computerized prosthetic arm from the market.This would allow the firm to:
A) minimize its return on investment in developing each generation of the product.
B) make its products backward compatible.
C) avoid cannibalization of the sales of its current prosthetics.
D) build a smaller installed base for the new computerized prosthetics.

Question

Quizplus · Accepted Answer

By withholding the new computerized prosthetic arm from the market, BioSense Prosthetics Inc. can avoid cannibalization of the sales of its current prosthetics. This means that customers will continue to purchase the current prosthetics instead of switching to the new and more expensive computerized prosthetic arm. By doing this, the firm can still earn high profits from its current products while preparing to launch the new product at a later date.