Sometimes we ask why there´re countries where innovation and new products takes time to be placed related to more developed markets. This is the case for this design of a Budweiser can. Despite the fact of strategic concerns we can think in "sunk costs" where indivisibility, the posibility of inaction, and irreversibility exist. We ask why in large markets as it is the case of USA, consumers can buy these cans, said aluminium bottles instead of the traditional can.We assume this kind of cans are more easy to handle and they are prefered than a traditional can. The new design requires new technology or at least the firm needs to invest money making arrangements at the production facilities. This investments are irreversibles due to their specificity and there´s inaction posibility, so we face sunk costs
In this sense we need to reach scales to make the new technology more profitable than the existing one and in this sense the unit cost will be less than the prevailing with the old technology.
Still the firm will have to make a hard investment in Research and Development (R & D), adapting technologies and even in new advertisement. The firm needs to evaluate the project of putting the new product in the market and it seems obvious they need to reach certain scales ( a greater market share ) to cover the new additional investments, fixed and variable costs.
The USA Food & Beverages market is a large market and the new required scales can be reached faster than it could be in any other market. So we could expect the innovation to be placed first in these markets than in latinamerica. If we think in the South Region Food & Beverages market (said beverages and beers) and we consider Chile, Brazil and Argentina we could expect in the long run this kind of cans being placed at the local market.
So we could expect the required time to place innovations at the market being related to the size of the new sunk investments and sunk costs. First we need to reach enough scales economies where the new technology will be more convenient and then make new expenses in specific advertisement to the new product and in this sense there´s inaction posibility but once the decision is taken firms need to sink costs to crown the market.
