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Strategies for Different Stages
of Product Life Cycle
Strategic MarketingManagement
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The Introduction Stage
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Introduction Stage
There are few or no competitors of importance.
Profits are negligible due to high production cost, R&D, andmarketing costs.
s a general rule, pricing is set high to attempt to reco!er thesecosts of introduction. "ut as we will see, this in not alwa#s so.
During the introduction stage there is a certain amount of
bu#ers inertia.
$ustomers must be con!inced to %tr# the product. Strateg#re'uires a particular emphasis on promotion, and thusmarketing costs are high.
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Introduction Stage (Contd.)
(n this stage manufacturing has an o!er ) capacit#.
Production runs tend to be short, and there is a high )
skill labor content that contributes to the highproduction costs.
There ma# be some attempt at e*port in this stage, but
usuall# such efforts are limited.
$hannels of distribution are probabl# limited due tothe limited resources a!ailable, and thus the first
channels opened are selected !er# carefull#.
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Introduction Stage (Strategies)
(n the introduction stage our basic purpose is toestablish market shareand persuade the earl#adoptersbu# our product.
+or lectronics & -adgetr# To establish share andpersuade earl# adopters to bu#, R&D andengineering are ke# functions.
/arious combinations and use of product price,promotion, and distribution !ariables are alluseful. .
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Introduction Stage (Strategies)
The newer the class of product, the harder it ma# be to get itaccepted.
The more comple* the product, the slower the acceptance.e.g. personal home computers.
n!irons can0 of course, slow down the introductor# stagee.g. Maggi 1oodles, utomobiles.
clear and significant competiti!e differential ad!antageo!er older products can shorten the introduction stage. Thismeans either superior 'ualit# or significantl# lower prices.(n general, the higher the cost of the product, the larger this
ad!antage must be.
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Four Introductory Marketing Strategies
Rapid-skimmingstrategy
Rapid-skimmingstrategy
Rapid-penetrationstrategy
Rapid-penetrationstrategy
Slow-penetrationstrategy
Slow-penetrationstrategy
Slow-skimmingstrategy
Slow-skimmingstrategy
Pric
e
Low
High
PromotionHigh Low
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THE PRICE QUALITY RELATIONSHIPTHE NINE PRICE/QUALITY STRATEGIES
PRICE
LOW MEDIUM HIGH
LOW Cheap value
strategy
Out of step
strategy
Exploitative
strategy
PRODUCT
QUALITY MEDIUM Above average
strategyMiddle of theroad strategy
Overchargingstrategy
HIGH Superb valuestrategy
High valuestrategy
Premium strategy
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CONSUMERS AN THEIR RESPONSE PATTERNS
the unique value effect:
the more distincti!e aproduct is, the less price sensiti!e bu#ers become0
the substitute awareness effect:the more
aware consumers become of substitutes, thegreater their price sensiti!it#0
the difficult comparison effect:the moredifficult it is to make direct comparisons betweenproducts, the less price sensiti!e the# are likel# to
be0
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CONSUMERS AN THEIR RESPONSE PATTERNS
the end benefit effect:as percei!ed benefitincreases, so price sensiti!it# reduces0
the sunk investment effect:when theproduct is used in association with products
bought pre!iousl#, price sensiti!it# is reduced0
the shared cost effect:price sensiti!it# isreduced when the costs are shared with one ormore other parties0
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CONSUMERS AN THEIR RESPONSE PATTERNS
the price-quality effect:the greater thedegree of percei!ed 'ualit# or e*clusi!eness,the lower the price sensiti!it#0
the inventory effect:when the productcannot be stored and consumption takes placeimmediatel#, price sensiti!it# again reduces.
the total expenditure effect:the lower thee*penditure is as a proportion of their totalincome, the lower the degree of pricesensiti!it#0