Recently, sales of skateboards have fallen.
To widen its product portfolio,
Skate4U Ltd is considering entering a new market by developing a range of
low-price scooters (non-motorised).
The scooter market has grown rapidly in thelast three years and is dominated by four businesses that receive 80% of the sales revenue in the market.
Skate4U Ltd currently sells high-price skateboards using high-quality materials.
There are concerns about the possible negative impact on Skate4U Ltd’s brand
image if it begins selling low-price scooters. Skate4U Ltd will need to set clear
sales targets to make sure the business will make a profit from the sale of scooters.
The business can produce 10 000 scooters a year.
The market leader has recently run a successful sales promotion offering a signed scooter as a prize to the customer who creates the best new scooter design. This promotional activity resulted in an increase in its sales of 10%. Skate4U Ltd is considering which methods of promotion would be best to help gain brand awareness when entering the scooter market.
Skate4U Ltd will promote the new scooters to its current market of skateboard users.
Skate4U Ltd is considering taking the risk of extending its product portfolio into a new market.
Recommend whether Skate4U Ltd should develop a range of low-price scooters. Give reasons for your recommendation.