Question

For the following two scenarios, describe whether the implied demand uncertainty would increase, decrease or stay the same? Explain the reason why. (i) A company introducing five new products to the market at the same time. (ii) A company planning to enhance its service level from 90% to 95%.

Answer 1

(i)

If the company is planning to introduce five new products in the market at the same time then it can be expected that the products may be of different categories with respect to shapes, qualities, and genres etc. The market demand and segment validation are the key important factors in this particular type of scenario. The company is required to check the market population and their level of interest at each of the five new products that they are going to introduce in the market. After the validation, if it is found that the audiences are showing an exceptional response at all the five new products equally then the chances of acceptation of the five new products may exist. It is all depending on the positioning, demographics, and Geographic’s of the place with the amount of willingness among the population.

In the general case, if the population is not responsive or the lower number of people show their interest level then introducing five new products in the market at the same time will not worth. The uncertainty will surely increase and product selling at each category among the five will be less. The audience will either concentrate on one or two products at a time and from the rest of the products, the revenue generation will become difficult. Therefore, it is completely depending on the market segmentation if the market has the demand of all the five new products equally then the uncertainty will decrease, otherwise, the uncertainty will increase surely as accepting five new products equally by the audiences at the same time is too difficult.   

(ii)

If the service level of the company increases from 90% to 95% then obviously the uncertainty will decrease. The more focus on the service level enhances the work performances and effective standards are achieved by obtaining positive results. If the organization plans to provide an advanced service level that they generally used to provide then the chances of error generation or failure of the plans and processes are expected to be lowered. Therefore, with the increase in service level from 90% to 95% the factor of uncertainty will decrease.