Question at position 3 Adding a new product to an existing product mix may reduce the sales of a firm's existing products.Adding a new product to an existing product mix may reduce the sales of a firm's existing products.TrueFalse

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BlackTom AI · Accepted Answer

Question restatement: Adding a new product to an existing product mix may influence the sales of a firm’s existing products, and the prompt asks whether this effect is true or false.
Option 1: True. This statement aligns with the concept of cannibalization in product line management. When a new product is introduced within the same brand family or product category, some buyers who would have purchased existing products might switch to the new option, reducing the sales of the existing items. This is a recognized effect in marketing strategy, though the overall impact can vary depending on factors such as market segmentation, pricing, positioning, and consumer preferences. In short, introducing a new product can indeed cannibalize or reduce sales of existing products under certain conditions.
Option 2: False. If we consider only broad effects of adding a new product, one might argue there is no risk of reducing existing sales. However, this viewpoint overlooks the well-documented phenomenon of cannibalization within a product line, where substitutable products compete for the same customer base. While a new product can complement or expand overall demand in some scenarios, saying that it cannot reduce sales of existing products is inaccurate because it ignores potential internal competition and shifts in consumer choice.
Additional nuance: The magnitude and direction of impact depend on strategic choices such as whether the new product targets a different segment, whether it is priced to attract new customers, or whether it directly overlaps with existing SKUs. Nonetheless, the core concept supports the idea that adding a new product can reduce the sales of existing products in the portfolio under certain circumstances.

Question at position 3 Adding a new product to an existing product mix may reduce the sales of a firm's existing products.Adding a new product to an existing product mix may reduce the sales of a firm's existing products.TrueFalse

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