Product Life Cycle the Introductory

Product Life Cycle

The introductory stage of the product life cycle is the beginning of the cycle, where the product is new on the market. Consumers are generally unfamiliar with the product at this stage and it has almost no market share. During this stage, the company will have settled on a quality level and brand for the product and obtained patent protection on key elements of the produce, and now the work of introducing the product to the public begins (QuickMBA, 2010).

The introductory stage of the life cycle has specific ramifications for the four Ps of market. The company during this stage must identify the gaps in the market that is seeks to occupy in order to establish the brand. This will help the company to set the quality level of the product

During this stage, the company has a number of options with respect to the pricing strategy. Sometimes a product in this stage is only being tested in the market, such as with a new menu items at a restaurant, and the company wants to introduce it at a normal price to see how consumers respond. However, a common pricing strategy for a product in the introductory stage of the product life cycle is to utilize penetration pricing, whereby the product is priced lower than what would otherwise be its regular price (no author, 2012). The idea behind penetration pricing is that with a lower price, the product will be more competitive. This will induce consumers to try the product. The price will be raised eventually, once enough consumers have become regular users. The idea is that this pricing strategy is a good way to build up market share. The more market share a product has, the easier it will be for the company to generate economies of scale in production to bring down production costs.

Place is a key element of the marketing strategy during the introductory phase. Production levels may not be high enough to support large-scale distribution, and demand is not likely high enough either. This means that the company must be smart with its distribution, focusing on key retailers and channels to introduce the product to the public. There are exceptions, however. For a lot of consumer electronic products -- smartphones, for example -- companies prefer nationwide rollouts of new products through major telecom distributors. Such a strategy is often supported, however, with penetration pricing and extensive ad campaigns. For companies that cannot afford this, regional distribution or through specialty stores is often a first step during the introductory phase until some word of mouth has been built up to support the product.

Promotion is critical during the rollout phase. At this stage, most consumers are unaware that the product exists, so promotion needs to not only introduce the product, but explain where it fits into the competitive mix, its positive attributes, and convince the consumer to buy. Promotion levels can be very high during this stage -- new cars, for example, receive extensive promotion to support their brands. For some companies -- especially smaller ones -- promotion during this phase is tricky because they do not have the money to support a massive promotional campaign. Before the product is earning for the company, the company must find ways to get exposure for the product without spending much.