If a firm invests in continuous innovation and willingly cannibalizes its existing products with more advanced products,the firm can:
A) lose a significant number of customers to competitors.
B) make its products more backward compatible.
C) prevent competitors from achieving a significant technological lead.
D) gain greater trust from distributors who have huge stocks of the existing product.

Question

Quizplus · Accepted Answer

By investing in continuous innovation and cannibalizing existing products, the firm can prevent competitors from achieving a significant technological lead. This strategy allows the firm to stay ahead of the competition and maintain its market position as a leader in technological advancement. While the firm may lose some customers to competitors in the short-term, the long-term benefits of staying ahead of the curve can outweigh the potential losses. Additionally, gaining greater trust from distributors who have huge stocks of the existing product (option D) is not necessarily a direct result of this strategy.

If a Firm Invests in Continuous Innovation and Willingly Cannibalizes