Kookaburra Cricket Bats: Dealing with Cannibalization

Case Analysis #5
Overview
Kookaburra, a maker of cricket equipment, has developed a new cricket bat and has two
possible approaches for introducing the product in the Indian market. The new product is a
superior prototype that outperforms the traditional line of cricket bats. Each strategy will
cannibalize current sales, the calculations in Figure 1 & 2 show the impact of each strategy. The
first approach was to launch into a niche market and the other is a mainstream launch strategy to
appeal to the mass market.

SWOT Analysis
A SWOT analysis analyzes the organization’s strengths, weaknesses, opportunities and
threats Cialis is facing. It showcases the strengths to focus on, the weaknesses that could be
improved on, opportunities to take advantage of and threats that need to be minimized.

Strengths Weakness

- Has a strong brand name and - Cannibalization of their other bats for
reputation in the cricket community the newest one
- Has the highest performing bats over
their competitors
- Is investing in innovation to improve
products

Opportunities Threats

- There are many countries were cricket - Adidas is threatening their image and
is the most popular sport and could reputation in the highest performing
even be considered the country's bats
national sport
- There is always a need for better
performing products
Year 1 & 2 P&L Statements (figure 1)

Year 1 & 2 Cost and Impact of Cannibalization (figure 2)

Data Analysis
As shown in the profit and loss statements, profit pre-cannibalization in the niche market
first year is negative with a loss of roughly $12,000. The following year they have a positive
profit but nowhere near the value of the mainstream. The mainstream option is considerably
large the first year but almost four times smaller the next year. With cannibalization considered,
year 1 results in a loss for both niche and mainstream (niches loss is less than that of the
mainstream). In the second year estimated profit is lower than pre-cannibalization but similar to
pre-cannibalization mainstream makes more than the niche market. Based on this research alone,
the smartest idea would be mainstream but there are more factors to consider.

Understanding Kookaburras Market

Kookaburras new product not only surpasses past models in traditional measures of
performance but it does not require the process of oiling and knocking in the traditional bats
needed. Market research though, showed that this was not an important feature to most
customers. They doubted a bat that does not need to be knocked-in could truly be
high-performance. This product, although superior, is not necessarily needed; Kookaburra is
solving a problem that doesn't really exist. Consumers are content with the original and even
believe that knocking-in is necessary. While some customers will enjoy the easy and use aspect,
others will not. Those consumers prefer the intimate experience of making the bat work therefore
this is not a problem for them. In the same way one person will prefer a manual car to an
automatic despite ease it boils down to a matter of preference. In short, this product is creating a
solution without a real issue being voiced by consumers.

Importance of Global Marketing

The importance of global marketing in the Kookaburra case is understanding the needs
and wants of their consumers on a global scale. Consumers in India will likely need different
items than one in America, and products need to be marketed differently to encompass that
cultures norms. For the new bat, it is critical to understand how each country uses their bats. In
India, where cricket is the most popular sport, there are certain customs with their bats. Having
previously tested the name “Ready Kangaroo” and proving it is a good name, eliminated cross
cultural confusion on the importance of this new bat.
Recommendation/ Positioning Strategy
Pros and Cons of Each Approach
Niche

Pros Cons

- It will be extremely cost effective to - Because it is a smaller market, it will

begin in a niche market and after be difficult to have a large profit
building an extensive want for the - Lack of economies of scale
product moving to the mainstream
- Already associated with a loved and
trusted brand
- Having the niche market as a test can
prove their claim of being the highest
performing bat
- Understanding the market better as
well the needs of consumers
- It is easier to get market insight into a
niche market than a main stream
- There is less risk in selecting this
option

Mainstream

Pros Cons

- Reaching a large audience - Lack of need for the product

- Higher revenue than niche
- Higher risk but a much higher
return
- Increased competition as brands like
Adidas threaten their image
- More units needed to be made and
sold
- Over double fixed cost of niche
market (differentiating the product is
extremely costly)

As stated in the data analysis, the research on an estimated profit is not enough to make a
decision on which strategy to choose. I personally would recommend the niche market for
Kookaburras new product. This is because there is less risk in testing out the product in a smaller
market than spending thousands on marketing the product to the masses. Choosing a niche
market offers the company insight into the consumer; what they like about the product or don’t,
why it is being used or not bought. Alongside this is that the product is not a need and it is
actually unsure if consumers are going to change for the traditional bats for this product. It is
stated in the case, “Marketing research had indicated that this was not important to most
consumers… However, it was very appealing to a select group”. It was mentioned previously
that Kookaburra is solving a problem that does not really exist so the best way of seeing if this is
an appropriate solution is by starting small.

Conclusion
Kookaburra has an innovative product that makes the bat easy for quick use but because
this is not a necessary product, it is recommended that they go with the niche option. Despite the
projected loss in the first year, pre and post-cannibalization, the following year profits are made.
If the product is successful in the niche market they can spread on to mainstream and still reap
the benefits but by going small first can ensure they have support for their new product. In
Kookaburras situation it is better to play it safe first and then progress to a wider market because
of consumer factors.