Talha is a very talented and hardworking entrepreneur who always comes up with innovative solutions

to problems. Recently, he came up with the idea of a temperature-controlled flask. This flask can heat
up and cool down liquids inside it. He realizes that people who work long hours everyday will benefit
from this technology.

Talha does not want to waste time on product testing because he thinks the market will accept it. He
wants to get into mass production straight away and target the mass market from the beginning. After
the product is introduced, Talha feels that the growth rate will sustain for a considerable period of time.
Therefore, his company should manufacture 500,000 flasks in the first batch.

As a person who always has one eye towards the future, Talha plans beforehand how this technology
will evolve in the market. He anticipates what type of customers he will attract over the lifetime of the
flask and competitors that his company will face. As a result, he plans his strategies accordingly.

As Talha’s consultant, you are required to do the following:

1. Tell Talha whether he is right or wrong about getting into the market without product testing. If
you think he is right, explain. If you think he is wrong, what should he do?
2. Tell Talha whether he is right or wrong about mass production at the beginning. If you think he
is right, explain. If you think he is wrong, what should he do?
3. Help Talha understand the types of customers that his company will attract over the lifetime of
the flask. What should be Talha’s offering strategy for each type of customer?
4. Considering that Talha’s company can get to economies of scale, what strategies should Talha
use to take competitors when the market gets saturated?

Answer – 1

According to me, Talha is going to make mistake if he does not test his flask market. The process of
testing a new product is called Agile Development. It is a part of lean production method. The process
starts with the minimum viable product (MVP) which is the most basic version of the finished product
with no name of the brand and tested on consumers before introducing to the market. Those MVPs are
sold to real target customers at certain place for testing and gather their feedbacks and tests hypothesis.
These feedbacks are used towards the production of the new improved version of the final product. If
the test hypothesis is pivot (negative feedback from customers) you keep changing the features of the
product until the hypothesis is persevere (positive feedback from customers) then sell the products to
the mass market in a wider distribution channel.

If at the first go Talha produces and sell flasks to the mass market with mediocre features or with
complicated technology, his flask might not be accepted by the mass people. Therefore, if his flasks are
not accepted, the production, distribution and promotion costs will incur more loss to him rather than
testing a MVP because it is cheaper.
 Answer – 2

Talha should not go for mass production. This is because, as he expects his growth rate to sustain for a
considerable time but in reality it won’t. The concept of industry growth rate, at growth stage the
growth rate will be highest and based on this Talha may anticipate that his growth rate will remain high
in the future so he starts producing more. Also, this will attract competitors which will lead to increase
capacity of output which exceeds the demand. In shakeout stage, the growth rate slows down so there
is excess capacity. This will lead to storage cost and at a time he will sell the remaining output at a low
price which will lead competitors to lower its price as well. This leads to price war and the product goes
to maturity stage and eventually declines.

Moreover, his innovations may also fail because even if he thinks that there is a demand for his
innovative product, he might be wrong because there might be unknown demand as in, there may not
be any demand if he does not do market testing before. Also, there might be poor commercialization
that is not being able to communicate with the customers effectively and poor marketing mix as well

Therefore, he should adapt the lean production method. This includes identifying the problem that
consumer may face and coming up with an MVP using agile development where they make prototypes
and introduce it to a certain market for customers and open for feedbacks. Using that feedback will
eventually lead to a final product that will be ready to be launched in the mass market.

Answer - 3

According to the case, Talha anticipates that his growth rate will sustain for a considerable amount of
time for his innovative flask. If he follows the same strategy, he will be able to attract the customer
agroups that are Innovators and Early Adopters. Innovator are the type of people how like to show-off
about a new product that has a new technology without considering the quality of the product and the
price they are paying for. On the other hand, Early Adopters are type of customers who, like the
Innovators, do not care about the price and quality but instead of showing off they understand the
future potential of the technology of the product.

Talha is able to satisfy these two groups of customers initially. But as he wants to target the mass
market by a mass production of 500,000 units in the first batch, Talha should think from the mass
market’s point of view. Early Majority are the 1 st customer group in the mass market. They want the best
quality at the cheapest price and will do the value cost trade off. So for them he has to provide the best
quality at the most reasonable price. Next, if Talha wants to go deeper into the market, he needs to
satisfy the Early Majorities completely because they are the customer group that will introduce Talha’s
flask to the next customer group called the Late Majority. This is the scared customer group who seek
reviews, word of mouth and source of encouragement provided by the Early Majorities. After attracting
the Late Majorities, sometime later if the technology becomes such a success that it eliminates the
traditional flask that we use now, it will be the time for Talha to attract the Laggards. This customer
group does not have the willingness to shift to a new technology at all. However, they will be forced to if
there are no regular flask that will be available for them.

As Talha wants to enter the mass market, he should understand the reaction to his offering of the mass
market. If the initial success by the Innovators and Early Adopters smugs him, then he may fall under the
Chasm. This is the failure to understand the difference between Early Adopters and Early Majority. For
this he might lose significant amount of shares which may lead to failure of his business.

Answer – 4

If Talha gets economies of scales, he will achieve low cost of production per unit with more quantity of
output. This means he can offer his flask at a low price and with high distribution. Hence, there
strategies that Talha can use to take down his competitors that are making the market saturated.

 Product Proliferation: this is when Talha has a very strong distribution channel. If he supplies his
flask at a huge quantity in the market, rivals may struggle to find shelf space to sell their flasks.
Supplying huge quantity is only attainable if he produces flasks at bulk, and bulk production
leads to economies of scale. However, 100% proliferation is not possible.
 Limited pricing: as Talha achieved economies of scale, this means he can offer the product at the
lowest price for a short time because of low cost of production per unit. Therefore, if there is
any potential competitor tries to enter into the market, he can prevent them by charging price
which is slightly lower than its cost structure. This may lead to a lower profit margin for Talha
but in the long run he is able to survive the competition since he is capable of offering flasks at
lower price but his competitors, especially the newer ones, will not be able to offer flasks at a
price that is lower than its cost structure as their cost tends to be high.
 Price signaling: this is an aggressive strategy adapted by the established company. Here, since
Taalha came up with the new technology, he must be the most established company and have
the first movers advantage. His low cost of production can help him to lower its price so
aggressively that it gives a signal that no one in the industry can fight him in terms of price.