Comment 2 on Manisha

I would like to add some points about another brand extension of Google which contributes to
the majority of its earnings. A big sum of Google’s $110.8 billion revenue in 2017 came from its
proprietary advertising service, Google AdWords.

It is interesting to know When you use Google to search for anything from financial information
to local weather, you’re given a list of search results generated by Google’s algorithm. The
algorithm attempts to provide the most relevant results for your query, and, along with these
results, you may find related suggested pages from an AdWords advertiser.

AdWords advertisements integration touches almost all of Google’s web properties. Any
recommended websites you see when logged into Gmail, YouTube, Google Maps, and other
Google sites are generated through the AdWords platform. To gain the top spot in Google
advertisements, advertisers have to outbid each other. Higher bids move up the list while low
bids may not even be displayed.

Advertisers pay Google each time a visitor clicks on an advertisement. A click may be worth
anywhere from a few cents to over $50 for highly competitive search terms, including insurance,
loans and other financial services.

From Q3 2017 to Q3 2018, Google's revenue grew over 21.35%. During that time, advertising
from Google websites has comprised a relatively consistent 86.78% of total company revenue.
While other business segments contribute billions to Google’s income each year, Google makes
most of its money through online advertising.

References

Callaham, J. (2019). Alphabet records $110 billion in revenue for 2017, Google's annual
hardware sales doubled. Retrieved from https://www.androidauthority.com/alphabet-q4-2017-
earnings-834774/

WordStream. (2019). What Is Google AdWords? How the AdWords Auction Works. Retrieved
from https://www.wordstream.com/articles/what-is-google-adwords
Comment 3 on Teo Joo Tse

I would like to explain further on product cannibalization which has both positive and negative
side to a firm’s products. Product cannibalization is when a firm has multiple products that
compete with each other in the same market.

Negatives

Generally speaking, the term product cannibalization has negative connotations. It implies that a
firm has invested capital to develop new products only to take market share from its own
products. In some cases, large firms lack coordination between business units in areas such
as product management and marketing. In other cases, business units may actively compete with
each other. For example, when Apple introduced the more feature-rich iPhone and iPod, they ate
up the sales of lower-end iPods, including the nano, shuffle and classic series have highly
reduced.

Positives

At times, market cannibalism is used as a strategy if the company wants to increase its market
share, and hopes that the introduction of the new product will harm its competitors more than it
will harm itself. For example, when Apple introduced the iPad, it took sales away from the
original Mac computer. However, the iPad ultimately led to an expanded market for consumer
computing hardware and was quite a successful venture for Apple. Another example, When
Coca Cola introduced Coke Diet, cannibalization took place and the classic Coke lost market
share to Coke Diet. But overall Pepsi lost much more market share to Coke Diet so in the end
Coca Cola was the big winner. Apple’s founder Steve Jobs once quoted "If you don't cannibalize
yourself, someone else will."

References

Barnes, H. (2013). Cannibalization is Not a Dirty Word when Markets are Dramatically
Changing - Hank Barnes. Retrieved from https://blogs.gartner.com/hank-
barnes/2013/11/05/cannibalization-is-not-a-dirty-word-when-markets-are-dramatically-changing/

Twinword. (2019). Market Cannibalization - Twinword, Inc. Retrieved from

https://www.twinword.com/blog/market-cannibalization/