Case Number: 5-112-008, Year Published: 2012
HBS Number: KEL651
Decision Making, Financial Analysis, Innovation, Marketing Analysis, Product Development, Product Management, Technology Management
Israeli entrepreneur and inventor Dov Moran envisioned the creation of a mobile device that was a small, stand-alone, fully functional mobile phone that could be slipped into a variety of enclosures, or “jackets,” that would provide added functionality and better reflect the personalities of its users. As the development of the Modu phone began to take shape, Moran and his team decided that to ensure the success of the new phone’s much anticipated launch, Modu would develop and market the accessory jackets itself. The question now was which of the eight jackets to develop and what factors should be considered in making that decision. The case is about how to estimate optimal product-line extensions after accounting for experience curve and cannibalization effects of products that share similar features, cost, and price. This will require quantitative analysis that estimates the effect of the experience curve and cannibalization on cost, revenues, and ultimately, profit. The issue is how to optimize profits by choosing an ideal set of products.
• Understand the importance of quantitative analysis in launching product-line extensions while taking into account demand and cost side interactions • Combine both qualitative and quantitative data in choosing a targeted segment • Reflect on the strategic and financial considerations in choosing a segment for a new technology product • Evaluate the implications of experience curve and cannibalization when introducing product-line extensions and their impact on the decision under consideration
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