Page 174 - DMGT408DMGT203_Marketing Management

Unit 7: New Product Development and Product Life Cycle Strategies

3. Maturity: A period of a slowdown in sales growth because the product has achieved Notes
acceptance by most potential buyers. Profits stabilize or decline because of increased
competition.
4. Decline: The period when the sales show a downward drift and profits set eroded/plateau
off.

7.4.1 Strategies at Introduction Stage

After successful test marketing of a new product, the company introduces the product in the
market with full-scale marketing programme. The introductory stage is viewed as fairly risky
and quite expensive because large amounts of money is spent on advertising and other tools of
marketing communications to create consumer awareness in sufficiently large numbers, and
encourage trial. For truly new products, any direct competition may be very little or non-
existent and the company’s primary objective is demand stimulation for the category rather
than its brand. Profits are mostly negative in this stage, or in some exceptional cases they may
be very little.
Marketing Mix Elements During Introductory Stage: There is a vast difference between
pioneering a product category and a sub-category. Introducing a product category is relatively
challenging, expensive, time consuming and quite risky.

Example: Introduction of computers would have been extremely difficult than
introducing its sub-category, PCs. This is evident from the comments made by Thomas Watson,
Chairman IBM, “I think there is a world market for maybe five computers.” Similarly, introducing
telephone would have proved a challenge compared to the introduction of cellular phones
(sub-category).

Table 7.2: Strategy Elements Adopted by Successful Pioneers, Fast and Late Followers

These Companies … Adopted One or More of these Strategy Elements
Successful Pioneer – Large entry scale.
– Broad product line.
– High product quality.
– Substantial promotion expenditure.
– Larger entry scale than pioneer.
Successful Fast Follower – Leapfrogging the pioneer with superior:
1. Product technology
2. Product quality
3. Customer service
Successful Late Follower – Focus on peripheral target markets or niches.

The introduction phase is likely to be long even for relatively simple product categories such as
packaged goods. Generally, product sub-category and brands appear in the market during late
growth and maturity period and are likely to have shorter introductory as well as growth
periods. The aim of every company is to move quickly through the introduction stage and for
this research, engineering, production, are critically important to ensure the availability of
quality products. The company must be able to provide promptly post-purchase service and
availability of spares, if required. To encourage trial and repeat purchase, consumer goods
companies use a combination of demonstrations on TV, samples, special introductory prices,
and coupons. The company also tries to gain distribution and shelf space with retailers.

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