Introduction Stage of the Product Life Cycle

Instructor: Noel Ransom

Noel has taught college Accounting and a host of other related topics and has a dual Master's Degree in Accounting/Finance. She is currently working on her Doctoral Degree.

The introduction stage is the first of the four stages in the product life cycle. In this lesson, we will explore the various characteristics of the introductory stage through examples and explanation.

Introduction Stage of the Product Life Cycle

During the introduction stage, the product is unknown to the market and often requires a large business investment to produce the product. The first stage is the point in which the product is presented to the public for the first time. Because there is no demand for the product, marketing and branding are important to attract customers. The primary objective of the introduction stage is to launch the product and build product demand.

Let's use an example to illustrate the introduction stage. First off, Peter owns a yogurt company. No other company has launched a yogurt product, and this will be the first time anyone has ever heard of yogurt. Peter obviously has a challenge on his hands because he needs to launch his product and begin to increase demand for the product. Peter has invested thousands of dollars into market research and development of his yogurt product line. However, since no one knows how awesome yogurt tastes, Peter cannot simply market his product as a great tasting snack because no one will believe him!

Peter decides to launch his yogurt line during the introductory stage as a healthy alternative to a morning or afternoon snack. Peter only has three flavors: plain yogurt, strawberry yogurt and peach yogurt. During the product launch, Peter's sales are slow, and customer demand gradually increase. As Peter's demand grows, he learns more about his product demographics, the type of people who like the yogurt, and when and where they purchase the product. Peter can collect this data and use the trends to move through the next phase of the product life cycle.

Benefits of the Introduction Stage

Peter does not have any competition right now because his product is the only type of product that exists. Therefore, one of the benefits of the introductory stage is the lack of competition. Peter can also set higher prices for his product because he does not compete with anyone. As products launch, they are often set at higher prices to set the average market price for the product, and the owner can gain as much profit on the initial launch as possible. If a competitor enters the market, that competitor will most likely have to set yogurt prices close to the market price set by Peter's yogurt company in an attempt to gain a share of the market.

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