The Introduction Stage Of The Product Life Cycle (PLC)

Introduction Stage: Definition, Characteristics, and Strategy

What is Introduction Stage?

The introduction stage is the first stage of the product life cycle (PLC) where the new product first time entered the market, the product may be tangible or intangible. Due to its first time appearance in the market, the demand for the products is very little yet slowly growing.

Though the introduction stage is first, there are pre-stages which are market research and development of the products. Coming to the production and introduction of the product there is a huge cost in this process for a business firm. This stage is assumed more costly than other stages of PLC which are growth, maturity, saturation, and declining due to the need to invest a huge amount in pre-stages.

People (customers) are almost unknown about the products, sellers have to invest more in marketing and promotional activities so that they know the products the seller has for them. Since they are unknown, they might not even think of buying it, and one who is known might afraid of buying the new brand. Thus in this stage, sales are at a very slow pace.

The basic goal of the seller in the introduction stage is to present a new product in the market and as far as possible create demands for that product in the market. However, to achieve this, the product should be new that provide a unique solution to customers and the promotional activities should be informative.

Characteristics of Introduction Stage of PLC

Let’s understand the basic characteristics of the introduction stage of the product life cycle.

The Product is New

The fundamental characteristic of this stage is that the product is new in the market. The product may be innovative, modified, or imitated but it is new to the customers in any way.

No Competition

There is almost no competition at this stage in the market, if the competition exists, it is very small. The new products still have not gotten the desired level of demand. At first, there do not seem opportunities for the competitors. Thus, only one or two dominant companies can stand and create demand for their products.

Slow Increase in Sales

Here, the sales of business firms start from zero level and rise at a slow pace since most the customers are unknown about the new products, and even they know they hesitate to buy a new one thinking they would not comforts they get from a familiar one. Due to this, the firm will not make mass production because of the limited distribution of the products.

High Cost and Almost Negative Profit

Firms need to invest a huge amount in product research, market research, product development, and its introduction in the market. Since the new product has not created its own market customers amount is very few, so the sales.

To increment of the sales rate depends upon the newness of the product as well as its desirability. Sometimes, in this stage, the marketer has to bear losses because of high production and marketing costs, limited sales volume, and poor cash flow.

Price is Little Bit High

Usually in this stage, the price of the products is high. This might be because of the high production, marketing, and promotional costs as well as customers also expect the price of new products are always a little bit high. In addition, due to the newness, uniqueness, and innovation of the product.

Promotion is Informative

To create a market for the newly launched product, the marketer has to be aggressively involved in promotional activities. The promotional tools advertising, personal selling, sales promotion, etc. are the effective way to go through.

It is human tendency to seek to know about the new things, so the customers are. In this stage, the promotional activities need to be informative instead of persuasive, because customers will be willing to know more about the new products, their benefits, uses, and cost before making a purchase decision.

Introduction Stage Strategy

The ultimate goal of the strategies applied in the introduction stage is to educate and attract new customers as fast as possible to the newly launched products and make sales. The following strategies can be used to make this stage more effective and successfully step into the next stage of PLC.

Price Skimming Strategy

Price skimming strategy is when the price of the new products is set high. This strategy assumes that people are willing to pay a high price for a new product because it has uniqueness in some that of the existing products.

Price skimming strategy is also known as market skimming. In this strategy, when the competition increases and substitutes products are entered into the market, the initial high prices are lowered to meet the competition.


This strategy best works when the new product is launched that has a unique feature, the demand of that product is fairly inelastic, and when the product is covered by patent rights or other legal rights.

Price Penetration Strategy

In price penetration strategy, first, the newly introduced product’s price is set low. It is done to penetrate (win) a huge market at the time of introduction, get more customers, and make sales as far as possible.

It assumes that when certain segments of the market are won, there is the possibility to progressively increase the price of the product. This strategy might best work when there is already existing competition in the market, when there is the possibility of economies of scale, and when there is already a large market segment for that product.

Competitive Strategy

In a competitive strategy, the price of a product is set to be near the prices of the competitors. If the product is innovative, there might be no need for this strategy, if the product is modified or imitated competitive strategy is what best works.

Though in the introduction stage competition is low, a marketer should not ignore the possibility of it. This strategy is best when a marketer wants to steal customers from competitors.

Marketing Mix

The marketing mix is the mixture of all efforts a marketer assumes to successfully launch a product and drive in profits from the market. This includes the effective utilization of 4Ps.

  • Product Strategy: This involves the launch of a new product to the market.
  • Price Strategy: This involves determining the price of the new prodcut, the strategy may be skimming or penetration.
  • Place Strategy: Setting an appropriate place for the distribution of the products is carried out.
  • Promotion Strategy: For effective promotion, different promotional measures are applied, and the goal is to promote informative promotion rather than persuasive one.

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