Strategies for Different Stages

of Product Life Cycle

Strategic Marketing
Management

The Introduction Stage

Introduction Stage
There are few or no competitors of importance.
Profits are negligible due to high production cost, R&D, and
marketing costs.
As a general rule, pricing is set high to attempt to recover these
costs of introduction. But as we will see, this in not always so.
During the introduction stage there is a certain amount of
buyers inertia.
Customers must be convinced to try the product. Strategy
requires a particular emphasis on promotion, and thus
marketing costs are high.

Introduction Stage (Contd.)

In this stage manufacturing has an over - capacity.
Production runs tend to be short, and there is a high skill labor content that contributes to the high
production costs.
There may be some attempt at export in this stage, but
usually such efforts are limited.
Channels of distribution are probably limited due to
the limited resources available, and thus the first
channels opened are selected very carefully.

Introduction Stage (Strategies)

In the introduction stage our basic purpose is to
establish market share and persuade the early
adopters buy our product.
For Electronics & Gadgetry: To establish share and
persuade early adopters to buy, R&D and
engineering are key functions.
Various combinations and use of product price,
promotion, and distribution variables are all
useful. .

Introduction Stage (Strategies)

The newer the class of product, the harder it may be to get it
accepted.

The more complex the product, the slower the acceptance.

e.g. personal home computers.

Environs can; of course, slow down the introductory stage

e.g. Maggi Noodles, Automobiles.

A clear and significant competitive differential advantage

over older products can shorten the introduction stage. This
means either superior quality or significantly lower prices.
In general, the higher the cost of the product, the larger this
advantage must be.

Four Introductory Marketing Strategies

Promotion
High

Price

High

Low

Low

Rapidskimming
strategy

Slowskimming
strategy

Rapidpenetration
strategy

Slowpenetration
strategy

THE PRICE QUALITY RELATIONSHIP

THE NINE PRICE/QUALITY STRATEGIES
PRICE

PRODUCT
QUALITY

LOW

MEDIUM

HIGH

LOW

Cheap value
strategy

Out of step
strategy

Exploitative
strategy

MEDIUM

Above average
strategy

Middle of the
road strategy

Overcharging
strategy

HIGH

Superb value
strategy

High value
strategy

Premium strategy

CONSUMERS AND THEIR RESPONSE PATTERNS

the unique value effect: the more distinctive a

product is, the less price sensitive buyers become;
the substitute awareness effect: the more
aware consumers become of substitutes, the
greater their price sensitivity;
the difficult comparison effect: the more
difficult it is to make direct comparisons between
products, the less price sensitive they are likely to
be;

CONSUMERS AND THEIR RESPONSE PATTERNS

the end benefit effect: as perceived benefit

increases, so price sensitivity reduces;
the sunk investment effect: when the
product is used in association with products
bought previously, price sensitivity is reduced;
the shared cost effect: price sensitivity is
reduced when the costs are shared with one or
more other parties;

CONSUMERS AND THEIR RESPONSE PATTERNS

the price-quality effect: the greater the

degree of perceived quality or exclusiveness,
the lower the price sensitivity;
the inventory effect: when the product
cannot be stored and consumption takes place
immediately, price sensitivity again reduces.
the total expenditure effect: the lower the
expenditure is as a proportion of their total
income, the lower the degree of price
sensitivity;