- In the introduction or pioneering stage, the main task is to acquaint the customers with the new product and its superiority over other similar products available in the market. In order to achieve this purpose, arrangements will have to be made to make the product available to the customers in the market place through dealers and other distribution channels. Introduction of a new product also involves special and concerned promotional efforts. The pricing of the product also needs careful consideration.
- Introduction stage of PLC is marked by low sales and slow growth in sales volume. The profits are low and may be negative. The management has to incur heavy expenses on promotion of the product. In the initial stage, competition from similar brand is missing as other firms would take time in developing a similar brand. But the new product faces competition from other product types. In this stage, the management can adopt one of the following four strategies as far as pricing and promotion of new products is concerned. The pioneering or initiating process may be slow or rapid depending upon the degree of intensity of competition and resources available with the company for promotional effort.According to P. Kotler management can pursue one of the four strategies on the basis of high/ low, price and promotion.
- Rapid skimming strategy consists of launching the new product at a high price and with a high promotion level. The firm charges a high price in order to recover as much gross profit as possible. It spends heavily on promotion to convince the market. This strategy is adopted when the customers are unaware of the product and can pay the asking price and the firm faces potential completion and wants to build up brand preference.
- Slow skimming strategy means high prices and low promotion. Prices are kept on higher side to earn as much gross profit as possible and promotion expenses are low because the market is limited and most of the customers are aware of the product and the potential competition is not eminent.
- Rapid penetration strategy means launching the product with low price and high promotion, the price are kept on the lower side because the most buyers are price sensitive, the promotion expenses are high because the market is large, the market is unaware of the product and there is strong potential competition.
- Slow penetration strategy means introducing the product with low promotion and low price. The prices are kept low because of the price sensitive buyers and promotion is low as the market is aware of the product and there is some potential competition.During the introduction period, promotional expenditures are often at their highest ratio to sales. This is not only because sales are small but more because of the need for a high level of promotional effort to:
- Secure distribution on retail outlets.
- Induce trial of the product; and
- Inform potential consumers of the new and unknown product.
Many times prices are also usually at the high point during the introduction stage because:
- Technological problems in production may not have yet been fully mastered.
- High margins are required to support the much promotional expenditure which is necessary to achieve growth.
- Sales to higher income group.
- Limited distribution.
- Costs are high due to relatively low output rates.
- Primary demand cultivation.
- Few competitors.Learn more about the various marketing strategies for the introduction stage of the product life cycle only at the University Canada West.
