• Marketing Strategy for Introduction Stage

    During the “Introduction” phase, Sales growth is slow because of

    • Expansion in product category which is required during this phase
    • Working out technical problems in newly launched products based on the customer complaints and feedbacks
    • Delay in adequate distribution because of lack of distribution network at the beginning
    • Customer accepting new product slowly

    Profits are either negative or low because of

    • Low Sales along with high cost of production
    • High distribution/promotion costs to increase awareness among the customers

    Promotions costs are high because of

    • Need to inform customers about new/unknown product through proper advertising
    • Need to induce trial to boost sales volume
    • Need to secure distribution/retail space in the malls and retail stores. This requires significant investment for a new product

    Price and Promotion are the main criteria to decide the appropriate marketing strategy during this phase.

    There are mainly 4 marketing strategies used for Introduction stage of any new product. These are explained in the below diagram.

    Introduction phase Marketing Strategy

    Rapid Skimming Strategy

    • New products are launched at very high price with high promotion level. Example: Apple iPhone which is launched with a new promotion and a very high price.
    • High price helps the firms to recover high profit per product and enables early break even
    • High promotional activities help for high customer awareness and quick adoption of the new product.
    • Used mainly for a new product which the market is less aware of. Main aim to build high awareness of the product.
    • Also used for products with very high brand value and customers are ready to pay the high price for the product

    Slow Skimming Strategy

    • New products are launched at high price but low promotion. Example: Mercedes Benz and Harley Davisson new models. These are very well known brands in the luxury auto and two-wheeler segments which do not require too much promotions for a new product
    • High price helps the firms to recover high profit per product and enables early break even
    • Low promotion helps to keep the marketing expenses low
    • Mainly used for
      • When market size is limited or market segment is very specific. Like Mercedes Benz models are launched only for luxury car segment and market size is very specific.
      • Market is aware of the product and brand
      • Customers are willing to pay higher price due to higher brand value.
      • Less competition due to superior quality and brand value

    Companies with very high brand values enjoy this pricing strategies which help them to sell their products at a very low promotional cost.

    Rapid Penetration Strategy

    • New product launched at a low price but with high promotion
    • Perfect example would be a mobile services launched by a new player in the market where new connections or mobile SIM cards are sold at throw away price to attract more customers.
    • Ideal to achieve fast market penetration and large market share within a very short period of time
    • Normally used when
      • The market is large
      • Market is unaware of the product
      • Customers are price sensitive
      • High product competition
      • Cost decreases with high volume. High fixed cost but low variable cost

    For this marketing strategy, companies depend on the sales volume to earn profit.

    Slow Penetration Strategy

    • New product is launched at a low price with low promotion
    • Example will be launching a new and cheaper two-wheeler from a well known two-wheeler company
    • Low price increase sales and encourages acceptance among the prospective buyers who are very much price sensitive
    • Low promotion reduces marketing cost significantly.
    • Mainly used when
      • Market is large
      • Market is highly aware of the product so less promotion is required
      • Market is price sensitive
      • Market is minimally sensitive to promos
      • There is some product competition in the market place

    Here companies aim for customers who look for value buys. Lower promotional cost also helps to keep the price lower and increases profitability.

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