Marketing Strategies for New Market Entries (Introduction Stage of Product Life Cycle) (Final Exam)

Question 1

Successful Brand Names have

Answer 1

Successful brand names have:
Brand equity
A strong message branded into the minds of consumers.

Measure success:
Brand awareness
Brand perception
Brand recall
Etc.

Question 2

What factors affect the likelihood that a new product innovation will be adopted?

Answer 2

Relative Advantage: - the degree to which potential customers perceive a new product as a superior to existing products.

Compatibility - with present needs, values and practices.

Complexity - the degree the customer feels the new product is difficult to use or understand.

Trialability - the degree to which a new product is capable of being tried on a limited basis.

Observability - the ease with which the a product’s benefits or attributes can be observed.

Question 3

Why does your marketing strategy change over the product life cycle?

Answer 3

Our goal is to be profitable. We create a marketing mix to meet the needs of consumers better than our competition.

Our competitors change as the product moves through the product life cycle.

Therefore, our marketing strategy must change.

Fads, enter market quick, experience strong and quick enthusiasm, but then leave really early

Start, peak, and end early, move through all the stages very quick and condensed

Question 4

Expected Characteristics and Responses by Major Life Cycle Stages

Answer 4

Introduction stage of PLC

Few targeted segments – competitors and expected profitability will be low or negative

Investing stage

Product line should be short at intro – focus your efforts on a smaller line of goods

Selective distribution – pick e-commerce giant that allows certain vendors to sell on their platform

Question 5

Intro Stage of Product Life Cycle

Answer 5

We want to get through this stage as quickly as possible because the input costs to develop the market are high and the revenues are still low. We also don’t want to develop the market for a competitor.

Objective should be to get through intro asap

• Largely from profitability pov, you’re losing money – get through it!

Introing a new product new to firm and target customers requires the greatest expenditures, product extensions, a little bit less so.

Challenge is to build primary demand – make them aware of product and convince them to adopt it

Target Market: innovators who are willing to try a brand new product. They make up 2.5% of the population.

Question 6

Types of Innovations

Answer 6

Question 7

Discontinuous Innovations

Answer 7

Discontinuous innovations (“new product classes”) have a longer “Introduction” stage than product extensions.

Question 8

Objectives of New Product and Market Development

Answer 8

• Secure future volume and product growth
• Individual development projects and different types of new entries will determine which other strategic objectives are able to be achieved

Important question:
Is it better to bear the high costs and risks associated with being a pioneer (and introduce a new product category) in hopes of maintaining a profitable leadership position or, to be a follower that watches for possible design or marketing mistakes made by the pioneer before entering the market?

Question 9

Market Shares of the Leader and Followers over the
Life Cycle of a Hypothetical Market

Answer 9

Question 10

Market Shares of the Leader and Followers over the
Life Cycle of a Hypothetical Market

Answer 10

Question 11

Leaders (Pioneers)

Answer 11

Question 12

Followers (relative to Leaders/Pioneers)

Answer 12

Note: Whenever possible, try to make the market unattractive to competitors, utilizing how they might see it from Porter’s 5 Forces Model.

Question 13

Mass-Market Penetration

Answer 13

• The objective of Mass-Market Penetration is to achieve rapid product adoption by both retailers and end-user. Try to secure a large share of the market quickly.

Question 14

Niche Penetration

Answer 14

Question 15

Skimming and Early Withdrawal

Answer 15

Question 16

Market Leader

Answer 16

• Maintain position as a product innovator.
• Make improvements to existing products
• Add a product line extension only if a competitor’s offer sneaks in a “new and improved” option.
• Attempt to try to tie-up distribution outlets.
• Offer retailer incentives.
• Offer cooperative advertising incentives.
• Attempt to create barriers to market entry.
• Try to get patent protection.

Question 17

Second Market Leader

Answer 17

• Take advantage of pioneer’s
  positioning mistakes.
• Take advantage of the pioneer’s product mistakes.
• Take advantage of the pioneer’s promotional mistakes.
  (bad messaging and poor media
  buys).
• Take advantage of technological improvements.
• Take advantage of the pioneer’s limited or depleting financial resources.