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New Product Launch

The Board of Directors has asked you to prepare and submit a proposal to launch a new product.
Based on your stated strategy and your current position in the marketplace, your proposal should include the following discussion:
1. In which segment should your new product be positioned? Low end segment
2. Considering the growth rate in this segment and the performance of current products, what is the potential for this new product over the first five years?
3. Based on your projections, determine the appropriate level of plant capacity that will need to be built. Also, determine if this investment will be sufficient to carry you through the first five years or if additional expansion will be needed to accommodate expected growth.

Solution Preview

Step 1
The stated strategy is cost leadership. The product is wood lathes of 24"capacity. This is a new lathe because it has a unique design. It is energy efficient. It has a splayed leg design and is suitable for cutting wood. The price of the Lathe will be $4,200. This price low, because similar lathes are priced at $5,000. It has a tapered roller bearings and hollow tailstock. It has cast iron bed.

Step 2
Low end segment will be the positioning of the new wood cutting lathe. The target segment will be furniture makers. Currently, as the economy recovers ...

Solution Summary

This solution explains the proposal to launch a new product. The sources used are also included in the solution.