Kookaburra Cricket Bats: Dealing with Cannibalization Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Financial Analysis

Investments

According to the key planning assumptions highlighted by Kookaburra reveals that the company will have to invest Rs50, 000 and Rs22, 000 for the first and second year for Ready Kangaroo. While considering the investments for the mainstream strategy, the company has to invest Rs150, 000 and Rs52, 000 for the first and second year. There is a significant difference in the amount of investment for capacity made for both the markets. However, the target market for Kookaburra Kahuna Ready is much wider than the niche market for Ready Kangaroo and can also reveal greater profits for the company. Therefore, considering the amount of investments with respect to the target market, it is much smaller for Kookaburra Kahuna Ready as compared to Ready Kangaroo. Similarly, the marketing investments that have been assumed by the company in the niche market for year 1 and year 2 is Rs88, 500 and Rs110, 500 respectively. However, the marketing investments in year 1 and year 2 in the mainstream market are Rs192, 500 and Rs220, 500 respectively. The higher marketing investment assumed by Kookaburra to target a mass audience in Indian market provides a possible chance of the success of the company’s brand due to high population market. The chances for buying the product increases ten times while targeting the mass market.

Profit and Loss

The unit sales that has been assumed for the company in year 1 and year 2 for the niche market is Rs80, 000 and Rs150, 000 respectively, whereas, Rs270, 000 and Rs440, 000 for the mainstream strategy. The highest percentage of sales are recorded in the mainstream market for targeting a large group of customers that ultimately will reveal higher profits in returns even though the profit margins are lower in this strategy. The revenues for the niche market is expected to achieve market saturation very quickly than the mainstream strategy. In the mainstream strategy, the product life cycle tends to be longer and contains longer growth phase that can result in a higher market share and revenues.

Alternatives

Alternative 1: Ready Kangaroo

Advantages

The marketing investments and the financial risks that are associated with targeting a niche market with a different brand is low.
The niche market can also be broadened if it appeals to the mainstream market.
A perfect market for cricket savvy consumers
Even if the brand fails to create an impression, it still does not affect the company’s name due to its indirect association with the parent company.
The strategy will result in lower revenues because it caters a niche market
Cannibalization is more likely to appear in this strategy because the end consumer would be unaware that the particular product belongs to Kookaburra
Higher price can restrict the possibility of new customers.
Appeals to a greater target audience that can yield greater revenues
The short term cash flow will greatly improve for Kookaburra and can utilize this as a working capital for improving the technology and innovate breakthrough products.
A higher level of middle class society in Indian market may purchase the product due to competitive pricing.
The marketing and financial risk is high
The profit margin is low for a single unit
New technological advancement can decrease the sales for the company

Disadvantages

Alternative 2: Kookaburra Kahuna Ready

Advantages

Disadvantages

Recommendations

The company must adopt the second alternative which allows Kookaburra to focus on the mainstream strategy in the Indian market to earn higher revenues and long term stability. The mainstream strategy is focused on placing the Kookaburra Kahuna Ready under the Kahuna brand category in order to avoid cannibalization. This strategy is compatible to the Indian market because of the wide population of the country. A product is likely to succeed when it caters to a larger audience because the probability of selling the units suggested by the company in both the years is low for a cricket bat. Therefore, Kookaburra must cater the mass market along with the additional feature of customizing the brand, according to the height and weight features of an individual.

The Kookaburra shall position its brand as the best performing bat amongst the many products of Kuhana as it allows a user to play straighter with more power. As the company suggests that the particular bat is far more superior than other cricket bats in different product categories of Kookaburra, the company must not reveal the true specialty of the product as to cannibalization..............................

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