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Planning: Early Introduction Stage

Characteristics:

• Competition: In many cases, when two or more companies are working to be first to market with a new product form, one company will be out ahead and for a period of time have the market to itself. However, this does not mean there is no competition. The company that launched the product still faces competition from existing products that customers previously purchased in order to satisfy their needs.
• Target Market: To establish interest in the market for a new product form marketers will initially target Innovators and to a larger extent Early Adopters.
• Product: From the target market’s perspective, product options are limited since only one or a very small number of companies are selling products. Because of the uncertainty in whether the product will be accepted by a larger market and because of the expense involved in producing products in small volume (primarily due to low demand) there are very few product options available.
• Prices: In most cases marketers follow a pricing strategy called price skimming in which price is set at a level that is much higher than can be sustained once competitors enter. Price skimming allows the company to recover development and initial marketing costs before the onslaught of competitors eventually lowers price.
• Promotion: For products considered to be a leap ahead of existing products, early marketers may have some difficulty explaining how the product satisfies customer’s needs. This is particularly an issue with high-tech products. In this situation the marketer must engage in a promotional campaign that is designed to educate the market on the product form and not necessarily push a specific brand. Additional sales promotion may be used to encourage product trial. Also, the sales force may begin a strong push to acquire distributors.
• Distribution: Upon product launch marketers continue efforts to build their distributor network. As we saw in the Development stage, the focus of marketers is to find distributors committed to handling the product.
• Profits: Marketers often experience low profits and most likely a loss as the cost of acquiring customers (i.e., promotion) is high and marketers also need to pay back development expense.

Brand Strategy:

For the early entrants in the market the most important goal is to create awareness for the product form. If customers can see that the product form holds similar characteristics to existing products then the marketer's task is easier since their job becomes one of convincing customers that this new product form is better than what they are currently using.

However, if the product form is significantly different than existing products then the marketers’ job may be far more difficult. Under these conditions the marketer must not only make customers aware of the new product but they must also educate customers as to what the product is, how it works and what benefits are derived from its use. For some products, such as technology products, conveying this message can prove difficult as customers may not fully understand how the product works and, consequently, not see a need for the product. Whether customers understand the product or not, this stage requires promotional spending directed to addressing the need for customer education and building awareness. Also, education and awareness alone are not enough; customers must often be enticed to try a product through special promotional efforts (e.g., free trials).

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