Introduction Stage of the Product Life Cycle: Overview

This article is an excerpt from the Shortform book guide to "The Marketing Plan" by William Luther. Shortform has the world's best summaries and analyses of books you should be reading.

Like this article? Sign up for a free trial here .

What is the introduction stage of the product life cycle? What happens to products during this stage?

In The Marketing Plan, marketing expert William M. Luther gives a brief overview of the first stage in the product life cycle. When products enter this stage, there are very few competitors but rarely any revenue is made.

Let’s look at the pros and cons of entering the market during the introduction stage of the product life cycle.

Introduction Stage of the Product Life Cycle

During the introduction stage of the product life cycle, a new product or service enters the market. The market size is small since customers are not yet aware of this commodity. Luther argues that businesses that enter the market at this stage benefit from fewer competitors. This gives them the chance to dominate the market as consumer interest grows.

However, there are risks involved since not every new product or service gains enough traction to enter the next stage. According to Luther, businesses should only enter the market during this stage if they can afford to make a loss and have resources to spare for research and development and building customer awareness for new products and services.

The Pros and Cons of Entering the Market During the Introduction Stage

Marketing experts Al Ries and Jack Trout (The 22 Immutable Laws of Marketing) expand on the benefits of entering the market during the product life cycle’s introduction stage. They argue that businesses that are first to enter their markets are typically more successful than those that follow, even if the latecomers have better products. Further, these first entrants tend to acquire and hold onto the largest market share throughout the market’s life cycle.

This is due in large part to consumer attachment and perception: When consumers adopt a new product, they become so attached to it that they unconsciously perceive the business that first introduces the product as synonymous with the product itself. For example, people often refer to tissues as Kleenex—because Kleenex was the first brand to offer facial tissues. This form of attachment makes it difficult for latecomers to wrestle customers away from early entrants.

While being the first business to enter a market does offer many advantages, Luther’s right to warn about the costs and risks involved with entering the market at this stage:

No revenue during the development stage: Businesses need to engage in intensive research and development before they can introduce a product or service into the market. This can be a long and costly process, depending on the product’s or service’s complexity.
High marketing costs: When releasing new products and services, businesses need to focus their marketing efforts on educating customers about the benefits of this new offer to build demand. This requires a great deal of trial and error—for example, testing different communication channels or promotional strategies. During this time, the costs still outweigh the revenue.
High production costs: Since there isn’t sufficient demand at this stage, businesses can’t risk being stuck with a large inventory of stock. Therefore, they need to limit how much they produce which results in higher operational costs—because it costs more to produce small amounts.
There’s no guarantee: Despite all of the resources businesses funnel toward introducing new products, they can’t guarantee that they’ll sell enough to recoup their costs and make a profit.

Introduction Stage of the Product Life Cycle: Overview