Functions and Frameworks is dedicated to helping business owners innovate

Wednesday, May 23, 2012

Product Life Cycle Phase I: Introduction

As a continuation, I shall discuss further the different aspects of marketing communications at the Introduction stage. Just to recap, Introduction is the first stage at which the product enters a market. If you haven't read the first post then click here | Product Life Cycle - A Marketing Communication Perspective.

When can we say that a product is introduced in a market? 

Introduction starts when the product is made available to the consumers, probably on a limited scale, and it experiences slow sales growth. 

What would be the objective of the company at this stage? 

The primary goal is to stimulate demand for the new market entry. Since the product has zero awareness, the marketing communication mix should focus on the product benefits. Features can also be highlighted to widen the product info and market acceptance. This stage can also target marketing intermediaries (i.e. trade) to encourage them to carry the product. 

What are the basic expectations when a product enters the Introduction stage?

Public acceptance begins at this phase when the consumers get acquainted with the product. It's the time when they learn the basic uses and how it can help solve some of their life issues. 

As I've mentioned in my first post, expect losses in this stage. Reasons: high promotion cost and extensive R&D expenditures. However, if this is planned carefully, it can serve as a good foundation for future profits. Companies expect to recover the cost and begin earning when the product moves to the next phase which is the Growth stage. The marketing efforts should focus on stimulating demand, establishing high price, offer limited product variety and increase distribution. 

The Marketing Communications Mix

advertising, personal selling, public relations, direct marketing, event marketing, digital marketing, sales promotion

Here are my suggestions as to what marketing communication tool you will use and the pressure level. Of course other practitioners might have other ideas but I think this can help you launch your product in the introduction stage.

AdvertisingHeavyTV, Radio, Print, OOH, Merchandising (Trade Level, POP), Guerrilla Marketing
Sales PromotionHeavyIntroductory Price, Coupons, Price Offs, Contests, Raffle, Buy one Get One
Event MarketingModerateBrand activations, barangay (village) events, city events, mall tours, school tours, trade shows
Public RelationsModeratePress conference, press releases, brand ambassadors or endorsers, community tie-ups


When asked "what is advertising", most practitioners will respond with 'Above the Line' (ATL) or 'Below the Line' (BTL) ideas. But in the context of the product life cycle, the primary question that needs to be answered is that what form of advertising is needed to launch a campaign on a certain stage. Also, what makes this tool different from the other 4 tools that I am suggesting? 

Advertising at its very nature is a tool that reaches large, geographically dispersed audiences, often with high frequency. Mostly referred to as mass marketing - advertising is commonly associated with the traditional medias: TV, Radio, Print. But as we evolve, so does the advertising medium. So in effect, when we refer to advertising, it should be the nature at which it reaches the audience. And in this case, a few characteristics should be noted:

1. Can reach all regions targeting a wide set of audience.
2. Low cost per exposure but overall costs are high. 
3. Consumers who sees products advertised in traditional medium are perceived as legitimate brands. 
4. It can stimulate short term sales
5. Impersonal.
6. One-way communication. 
7. Often use in Pull Strategy. 

The basic core of advertising is  making sure the product is immediately seen. It may get expensive but if the company can afford it then go ahead and do so. 

One negative aspect of advertising is that more often than not, medium scale enterprises who wanted to advertise on select mediums are limited with their budget therefore not gaining enough momentum. Thus losing more money in the process. This can also hurt the brand since if the desired channel is not the channel the target market is watching, then everything is lost at the very beginning. What I'm trying to say is that advertising, although there's a way to somehow make it a more targeted tool, is often used for mass marketing and mass marketing can only be achieved by products with a huge financial backup to support it. 

Sales Promotion

If advertising can help you reach mass markets, then equipping your marketing arsenal with a good sales promotion can help you achieve the short term sales goal and eventually help your long term growth. The purpose of doing sales promotion at this stage is to induce trial. Trial leads to product exposure. And if your product is really good, then consumer conversion takes place on the next store visit. Sales promotion helps make a memory imprint saying that the consumer experience is either good or bad.

Some people debate that sales promotion can make a brand perceived as low quality since it's on sale. I even remember marketing stories about this topic when a customer preferred another brand of airconditioner since the current one is priced lower than suggested retail price. Initial impression was - "maybe it's defective". My take on this subject - it can go both ways. Sales promotion is a tool that you can only use at certain stages in the product life cycle. It is not advisable to use it all the time because it can compromise the brand image. If you wish to dispose old stocks, then a sales promotion will help you do that but pricing should be thought out carefully. Pricing is a completely different topic but as a general rule, you price your items by adding all the cost from raw materials, production, marketing, distribution and actual selling. So you don't have to price it lower than that unless you just want to get rid of all your stocks. 

Event Marketing

Event marketing is highly suggested at this stage since it can go hand in hand with your advertising and sales promotion campaigns. Event marketing makes it possible for consumers to experience the product and help them identify themselves with it. It is a tool that bridges the gap between brands and consumers. What people see on billboards or TV ads or hear from radio commercials, are only mere brands. They become real products when they have actual exposure to what it can do. Some companies strategy focuses on event marketing to kick of a product. Some examples would be businesses in the luxury car industry, or small and medium scale business who would participate in trade shows to introduce their brand. 

One disadvantage of event marketing, base on personal experience, is that the type of event that you would want to market should go hand in hand with the product you are selling. While most corporations hire third party event agencies, most of them are not really in line with the brand vision. So most of the proposed brand activations campaigns are somewhat generic and brand incorporations are done at the last segment of the event. As what I experience, events are recycled over and over and originality is somewhat lost. But whats good about event marketing is that it makes the event organizers and brand managers more creative in selling the product. Creativity is key in event marketing.

Measurement is also another issue for most marketers. How can they measure their success. If you are new to event marketing and management, this is a tough topic to discuss since most metrics in this tool are challenging in terms of quantifying. But I always believe it's a matter of knowing whats your brand goal. Everything can be measured. And if you want to take it a step further, I always do a ROMI (Return Of Marketing Investment) calculation to include all aspects of marketing communications so that you'll be able to show the impact of your marketing programs isolated from the entire company efforts. 

Public Relations

Public relations is a series of planned activities that helps achieve the business objective. There are a lot of forms when we talk about public relations and even event marketing can be considered part of its arsenals. But what makes it important at this stage of the product life cycle is that it helps the brand or product become highly credible. It dramatizes the company or the product and it reaches many prospects missed via other forms of promotion. And more often than not, this is the least used element in the marketing communications mix. One of the reasons why is that marketing managers wants a campaign that has a direct consumer impact and using public relations may not be the best way to do that. 

But why am I suggesting it on the first stage of the cycle? As you can see in the matrix above, the pressure level I am suggesting is moderate. You don't need to go all out using this tool on the first stage. But what I'm trying to say is that using this tool at this stage can help your tactical goals meet your long term strategy. It can help build brand preference and easily encourage brand acceptance. 


So there you have it, four tools you can use at this stage. What is important to know is that your primary objective is to get high visibility in your preferred channels. And these channels are dependent on your target market. When creating your marketing communications plan, make sure to indicate the type of channel you want to pursue and how much you are allocating. Same goes with other stages and just allocate more than your estimated budget for this stage to give it an allowance. After all, this is the stage that you will be spending a lot. So make every centavo counts!