The early Growth Stage of the Product Life Cycle is certainly an interesting place for companies and customers. For many companies this is an exciting time as climbing sales leads to company expansion. For early adopting customers it is a time to experiment with different products and communicate their experiences to others. Thanks to an influx of competitors and customers, the market can change quickly forcing companies to continually adjust their marketing plan.
An example of an industry currently in the early Growth Stage is the burgeoning online coupon market populated by such names as Groupon and LivingSocial. While coupons as a sales promotion technique are far from being new, what makes this a unique product form is the process by which a promotion becomes active. While original coupon websites were primarily static sites containing images of printable coupons, the newer coupon sites often require group participation in order to take advantage of a promotion. Consequently, we can view these as social promotion websites.
While there has been extensive media coverage of sites offering social promotion, as discussed in this story, the long-term prospects for this market are uncertain. The problem is a classic one for new products. While Innovators and Early Adopters have already tried social promotions, they make up a relatively small percentage of total online consumers. Success in social promotion will only come when the much larger Early Majority market also purchases these promotions. If these customers do buy, then expect several social promotion companies to become highly successful brands. If the Early Majority does not buy, then most social promotion companies will face the same fate as many other once high-flying companies whose market was not sustained.
One problem facing these companies is that few consumers have actually tried daily deal-type coupons, so it is unclear just how big the market can get. A poll released last month by Harris Interactive, conducted on behalf of the American Institute of Certified Public Accountants, found that only 10 percent of those surveyed had purchased a group coupon in the past year.
What other Internet companies, that were early entrants in a market, did not make it out of the early Growth stage?
Image by Groupon