Black Fly Beverage Company Inc.

Introduction of a new product to the market by any company can be challenging as it brings either opportunities or threats and can increase or reduce the market shares of any organization depending on how it is handled. For Kelly’s Freeze Vodka Cool, the benefits associated with new product introduction seem to be more far reaching that the potential detriments.

Since this will be the first spiked ice to be introduced into the market, the company will gain competitive advantage due to the first entrance opportunity. Also, since there is ready market based on the orders already received, it can be said that the product will make a great impact on the spiked ice market. In addition to this, the spiked ice that the company intends to introduce will also be recognized instantly due to the association with cranberry vodka and listing in LCBO.

For Kelly’s, the introduction of the spiked ice will result in many benefits such as reduction of operation costs due to economies of scale, reduction of idle time and sharing of fixed costs. Since the economy of scale will result in the reduction of the unit costs of both vodka and spiked ice, it is predicted that marketers could use this as a marketing strategy by offering products at lower prices.

A reduction in price will ultimately result in higher demand and greater market share for the products and the manufacturing company. Although the initial set up costs may be high, it is clear that given these benefits, the spiked ice is bound to achieve a high rate of return leading to faster recovery. Introduction of the new product is recommended as it will result in increased diversification without interfering with the production schedule of the old product.

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