Apr 162017
 

A more limited competitor set

It is likely, in the introduction phase of the product life cycle, that there are limited numbers of competitors. At this stage of the PLC, the level of sales and profits in the market are quite small – which is unlikely to attract a large number of new entrants.

While having a reduced competitive set is generally good, when you are trying to grow a market, a limited set of competitors means that there is less “noise” in the market about the product. Collectively there is less communication, advertising, media efforts – there is less access to retailers – there is less access to innovators – all resulting in a slower take-up rate of the new product.

If there are multiple competitors trying to promote a new product and get the market established, then that is often a good result for all competitors = growing the market overall.

Some competitors will wait for the growth phase

There are also firms who would generally like to see the market take off before they decide to enter it. A good example here is Apple, which has generally been a slightly later entrant to market – for example, entering the smart phone market (with significant innovation) after it had started to become established.

These competitors will sit back and wait until the market is established – thereby saving themselves the cost of the initial “market start-up” – and looking to enter with some product variation of interest to the market. This puts the early entrant at risk, as these firms may “over-invest” in attempting to grow the market, only to see that much of their market share is eroded by newer and fresher players.

Greater innovation likely with new entrants

As competitors enter market, they are generally looking to have some form of innovation in order to provide consumers with an incentive to purchase their product. This leads to an increase in the variety products being offered. Existing firms, those early in the market in the introduction phase, have also developed further experience and expertise – thereby, making them more likely to be able to improve their existing products and to offer new variations.

Related topics

Marketing strategy checklist per PLC stage