In 2003, Porsche unveiled its new sports utility vehicle (SUV), the Cayenne (over $40,000). Porsche's decision to enter the SUV market was in response to the runaway success of other high-priced SUVs such as the Mercedes-Benz M class. Vehicles in this class had generated years of very high profits. The Cayenne certainly spiced up the market, and, in 2006, Porsche introduced the Cayenne Turbo S (almost $105,000)! Some analysts questioned Porsche's entry into the luxury SUV market. The analysts were concerned because not only was Porsche a late entry into the market, but also the introduction of the Cayenne might damage Porsche's reputation as a maker of high- performance automobiles.

In evaluating the Cayenne, would you consider the possible damage to Porsche's reputation as erosion?

Porsche was one of the last manufacturers to enter the sports utility vehicle market. Why would one company decide to proceed with a product when other companies, at least initially, decide not to enter the market?