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6.4.3 Product Introduction Phase

The Introduction Stage is the phase where a new product is introduced to the market. During this stage, the product faces several challenges and requires significant investment to create awareness, establish distribution, and induce customer trials.

Key Characteristics of the Introduction Stage

  • Slow Sales Growth:
    Sales grow slowly as the product is newly launched, and production capacity is often limited.
  • Technical problems may arise.

  • Distribution channels (wholesalers, retailers, etc.) may take time to establish.

  • Profitability:
    The product may not generate any profit, or if it does, it is very low. The company spends heavily on marketing and establishing the product.

  • High Promotional Expenditure:
    In comparison to sales, promotional spending is very high during this stage. The aim is not only to promote the product to customers but also to persuade distributors and retailers to carry the product.

  • Reluctant Customers:
    Customers may be hesitant to try out a new product, especially if they are unsure of its quality or benefits. Overcoming this reluctance is a challenge for marketers.

  • High Price:
    Since production is not at scale, and the product is new with limited market share, the price tends to be on the higher side.

Strategic Approaches in the Introduction Stage

During the introduction phase, different strategies can be adopted based on pricing and promotional efforts. These strategies can be categorized into four types:

1. Rapid Skimming

  • Price: High
  • Promotion: High
  • Description:
  • Aimed at a large potential market, but a significant portion is unaware of the product.
  • Those who are aware of the product are willing to pay a premium.
  • Competition is imminent, so brand preference must be built early.
  • Example:
  • New technology products such as smartphones, new TVs, or innovative home appliances.

2. Slow Skimming

  • Price: High
  • Promotion: Low
  • Description:
  • The target market is relatively small and selective.
  • Customers are willing to pay a premium for the product, and competition is not very intense.
  • This approach is often used for luxury products.
  • Example:
  • Luxury watches, high-end designer brands, and exclusive high-tech gadgets.

3. Rapid Penetration

  • Price: Low
  • Promotion: High
  • Description:
  • Used when the market is large, and a significant portion of the market is unaware of the product.
  • This approach is common for FMCG (Fast-Moving Consumer Goods) products, where the focus is on achieving wide distribution and generating awareness at scale.
  • Competitive pressures are strong, and the product must be marketed aggressively.
  • Example:
  • Toothpaste brands, new snack foods, or budget-friendly household products.

4. Slow Penetration

  • Price: Low
  • Promotion: Low
  • Description:
  • Typically seen in commodity markets or when a new product is entering a price-sensitive market.
  • The goal is to create initial awareness while keeping costs low.
  • The focus is on generating market share slowly, with limited promotional efforts.
  • Example:
  • Commodity goods like basic household items or new tech products aimed at a price-conscious audience.
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