Question

The Board acknowledges your analysis and agrees with your conclusion. They are now curious about how Charles Schwab can use strategies of a mature industry to increase its revenue. You present them two options. One is to implement a product proliferation strategy to establish a presence in the niches that the new entrants are targeting. This strategy has proven to be very successful in the past and can be a very timely advantage. Another plausible strategy is product development to enhance current products. Research shows that the current product line is still fresh in the consumers’ eyes. Which is the wiser choice?

Answer 1

Charles Schwab must choose between product proliferation and product development strategies in a mature industry to increase revenue. Product proliferation targets niche markets against new entrants, while product development focuses on enhancing current offerings. The decision depends on market needs, existing competition, and Schwab's internal capabilities.

Step-by-step explanation:

When considering how Charles Schwab can use strategies of a mature industry to increase its revenue, the Board must weigh the potential of product proliferation against product development. Product proliferation involves establishing a presence in niches to counteract new entrants, which can be a timely advantage given the right market conditions. On the other hand, product development focuses on enhancing current products that are still perceived as fresh by consumers.

If the goal is to diversify offerings to mitigate risk and appeal to a wider range of consumer preferences, product proliferation would be the preferable route. However, if the consumer base values the current product line highly, and there exists room for meaningful improvements that can enhance value, then investing in product development could lead to increased customer loyalty and potentially higher revenues.

In determining the wiser choice, Charles Schwab should assess market needs, existing competition, and internal capabilities to deliver on either strategy efficiently. The decision should also be influenced by the competitive dynamics present in the industry, such as the risk of other firms entering the market and the nature of any competitive advantages held by Charles Schwab.

Answer 2

Step-by-step explanation:

Analyzing the two strategies, the wisest choice would be the product proliferation strategy to establish a presence in the niches that the new competitors are aiming for.

This strategy consists of increasing a company's product mix, in order to increase its positioning in the market through the conquest of new market shares, which consists in the increase of consumers and a greater competitiveness for the company in entering new niches.

The other product development strategy to improve current products may not be a good strategy at the moment, as we have information that the current product is still fresh in the eyes of consumers, so the product is growing, which means that consumers already know the product and there are growth rates in the purchase and repurchase of the product.