Have you ever heard the saying, first impression is the last impression? The Introduction stage of the product life cycle is the time when your product is making its first impression on the consumer. The introduction or launch of a product is a critical time for its success, but it does not necessarily make or break the product’s chances of success.
In this article, we will discuss the introduction stage in the product life cycle, the types of products during the introduction stage, the four Ps of marketing, and more.
What is the Product Life Cycle?
The product life cycle is the time duration from a product first developed and introduced into the market to its eventual decline. The concept was formalized by Theodore Levitt — a German economist and professor at the Harvard Business School. In 1965, Levitt published an article in the Harvard Business Review called ‘Exploit the Product Life Cycle’, where he discussed his product life cycle model. (2)
Product Life Cycle Stages
A product generally goes through five stages in its product life cycle. The cycle maps a product’s journey from its first development through its decline. Different products spend a different amount of time in each stage, and each stage has certain risks, opportunities, and costs associated with it.
- The development stage is the research and development phase that comes before a product is first introduced into the marketplace. Companies conduct market research, develop prototypes, test product effectiveness, and plan the product launch during this stage.
- The introduction stage is when a product is first launched into the marketplace and the marketing team starts building product awareness
- The growth stage occurs when consumers have accepted the product, the demand is growing and the product is generating profit. This is the stage where competitors see the market potential and enter the market.
- The maturity stage is when the product has gone through the rapid growth stage and the sales are beginning to get stable. Companies usually reduce their prices in the maturity stage to stay competitive.
- Not every product goes through decline, but it’s an inevitable part of most product journeys.
The Introduction Stage of the Product Life Cycle
Competition: few Marketing Objective: spread awareness profit: minimal
The introduction stage is when the company invests a good amount of money and effort in product marketing and promotion with no guarantees of any return. That’s especially true if they’re introducing a new product into the market. Apple’s launch event is a great example of how marketing in the early stage of product development affects its eventual success. In the event, Apple showcases the new features of its latest (or soon-to-be-released) product.
During this stage, the marketing team is focused on reaching potential consumers and building product awareness. The goal is to build demand for the product and get it into the consumer's hand. Most companies use inbound and content marketing to reach consumers and help consumers find them.
Many companies also use test marketing to create demand and collect direct consumer feedback. Test marketing is a process that offers businesses an opportunity to test their product before its actual launch and gather feedback. It’s expensive but can be extremely beneficial when launching a new product.
Product demand and sales are low during the introduction stage. At the same time, it demands the highest marketing budget of all product life cycle stages. Even then it’s not uncommon to get negative financial results.
Length of the Introduction Stage
The length of the stage depends on various factors including:
- Product complexity
- Product novelty
- Market competition
You can’t define the exact duration of the introduction stage of the product life cycle. Consumer products usually have a shorter life cycle than their business counterparts. That is because consumers usually stay connected and hear about the latest technologies and products faster.
The Introduction Stage of an Original Product
The introduction stage is a risky time for any company, but the company with the most at stake is one with an original product. They need to work from scratch and bear the costs and risks associated with developing a new product. Here are a few challenges that a company launching a new product must face:
As we discussed earlier, launching a new and unique product has certain risks associated with it. It depends on many external factors such as customer sentiment, economic conditions, etc. For example, a local Pakistani startup — Airlift comes to mind. It was launched in 2019 as an uber-like service for mass transit using buses. Despite its huge initial success, Airlift had to pivot towards grocery delivery when the COVID-19 pandemic hit the world.
On the other hand, companies must spend a hefty sum of money on product development and market research before the product is released. Even then, they generally don’t start making money until the product enters the maturity stage.
Once the innovator has demonstrated that there’s solid demand for the product, imitators rush to the market in order to capitalize on the opportunity. This creates a boom that leads to the market growth or takeoff stage. However, for the originating company, the growth becomes truncated as it must share the growth stage with its competitors.
When it comes to competitive pressure, many companies don’t last as long as the industry. This is not just because there is competition, but because the competition often enters the market with lower prices and product improvements. The competitors didn’t have to spend money on market research and associated costs making it easier for them to keep the prices low and focus on adding new features.
Having competitors can be good in a way that they help expand the total addressable market (TAM). However, it restricts the originating company’s rate of growth and the length of its takeoff stage.
During the product development stage, profits are generally zero or negative and the sales volume is too low. This changes in the growth stage where the output rises and the cost of unit production decreases.
How to Minimize Financial Damage in the Introduction Stage of the PLC
During the introduction stage of the product life cycle, it’s common to encounter financial damage. A great way to minimize financial damage in this stage is by strategizing your moves from the very beginning.
To do that, start by defining your target audience, and create a buyer persona that represents your ideal consumer. (1) Personas combine research data and educated guesses about the audience.
Researching your audience helps you understand their motives for buying the product and make changes to your products accordingly. This also makes it possible to optimize marketing investments by investing in the right tools and platforms from the very beginning.
You can create buyer personas in four simple steps:
- Name your persona and create an avatar of them. This way, your team can easily categorize them and won’t confuse one with the other. A great way to name personas is by combining the name of the persona with their respective industries.
- Define your consumer’s demographic traits like age and educational background. This step is especially important if your product is designed for a specific demographic (like computer games or nursing pads).
- The job description of your consumer is also important as it helps you understand the day-to-day challenges of your target consumer. If you know their problems, then you can make sure that your product solves the problem they are facing.
- Understanding how your target consumer operates is important as the means of obtaining information has changed drastically over the past few decades. A Gen-Z consumer uses a totally different communication media from an eighty-year-old granddad of two.
Types of Products during the Introduction Stage
Different products come in different shapes during the product life cycle. There are generally four types of curves for four different products.
A high-learning product is one with a very long introduction stage because the consumers need to be educated about the product. These products are fairly complex and it takes a long time for consumers to realize their benefits.
In the 1980s, personal computers (PCs) went through a high-learning curve. Computers were a pretty new concept and most people thought they were good only for certain applications like calculations, storing data, or keeping track of records. It took consumers a while to realize that computers were a necessity in every household.
A low-learning product is not very complex and requires little to no learning period. That is why the introduction stage of a low-learning product is usually not longer than the other product life cycle stages. The best marketing strategy for a low-learning product is to quickly broaden the distribution to capture a larger market share from the very beginning.
The energy drink — Red Bull is a great example of a low-learning product. It was easy for consumers to understand the product in their daily lives.
As the name indicates, fashion products repeat the product life cycle over and over again. The product begins with an introduction and goes through an eventual decline. Although it often makes a comeback after the decline and experiences the full life cycle again. The length of a fashion product can be anything from weeks to months, years, and even decades.
Men’s and women’s apparel can be excellent examples of fashion products. Certain styles such as hemline lengths on skirts and men’s shorts became popular for some time and then went out of style only to make a comeback after some time.
The fad products have a very short product life cycle. They show very rapid growth in the introduction stage but their decline is just as fast. For these products, the growth and maturity stages are usually nonexistent.
Novelties including Pokemon and yo-yos were fad products. They rapidly gained popularity but we hardly see those around anymore.
The Four Ps of Marketing in the Introduction Stage of the Product Life Cycle
During the introduction stage, companies spend most of their resources on product awareness and a customer base. The marketing team usually focuses on the four Ps of marketing:
Creating a marketing campaign starts with understanding the product and asking questions like who needs this product? And why? And what unique features does my product offer that the competitor doesn’t?
The marketer’s job is to define the product and highlight its features when they introduce it to the consumers. Next, they decide on the cost of the product, and how it will be distributed, and promoted.
In the introduction stage, the product price is either too high (skimming pricing strategy) or low (penetration pricing strategy). You can do product price testing to measure your target consumer’s willingness to pay for your product.
Skimming Marketing Strategy
The skimming pricing strategy involves charging a relatively higher price for a brief period of time after launching a new or improved product. With this strategy, companies can capitalize on consumers who are willing to pay a higher price to be among the first to get their hands on the product.
A major advantage of using the skimming pricing strategy is that companies can recover the high development and other costs. After the initial launch, companies can lower the prices as the demand decreases.
The downside of using a skimming pricing strategy in the introduction stage is that it may attract competitors. Other companies will take the high prices as a sign of high profit and a signal to jump into the market.
Penetration Marketing Strategy
The penetration pricing strategy involves charging lower prices for a product in order to attract a larger consumer base. Keeping the prices low will also keep the competition at bay. This strategy usually results in a high sales volume helping you attain a large (if not dominant) market share. However, using a penetration pricing strategy requires a high invested capital, which is difficult in itself.
Product place or distribution is the consideration of where the product should be sold. The term also refers to advertising the product in the media to help gain maximum customer attention.
During the introduction stage, the product is usually placed in certain stores and displayed prominently to gain maximum attention from the consumers. The marketing team aims to put the product in front of consumers who will likely buy it.
Once the product passes through the introduction stage and enters growth, companies can make the product available in more places.
Marketing and promotion are important at every stage of the product life cycle. However, nothing can match the importance of product promotion and building product awareness in the introduction stage. To establish a strong brand, companies can also work with marketing or brand design agencies.
During the introduction stage, product promotion is focused on spreading awareness and educating the consumers about the product. If a company is launching a big product, then test marketing can be a great way to test the product before the actual launch.
Introductory promotions are a great way to encourage consumers to try your product. Once they give it a try, it’s only a matter of how good the product actually is.
Every stage in the product life cycle is important, but there’s no denying that strategizing early can save businesses a lot of trouble. To make product marketing easier, Starlight Analytics offers multiple solutions including product concept testing, price testing, and social listening. Product concept testing is the first step in the product journey as it measures the product’s market demand and helps refine the features accordingly. Price testing helps businesses price their products right and the social listening tool helps businesses find what their consumers are saying and understand their pain points.
Go to market with confidence!