1. Marketing Strategy for New Market
Entries
PPT8
Prof. S.Venkat

3. Profit per unit
(real dollars)
Product category sales
(real dollars)
How do opportunities evolve
over time? [Exhibit. 8.1]
Life cycle
extension
Profit/unit
Sales
Introduction
Maturity
Growth
Decline or
extension
Competitive
turbulence
Time (years)
Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing Company. All rights
reserved.

4. •#4
•#3
•D
•#2
•C
•Sales
•#1
•B
•Original Uses
•A
•Years
•Extensions

5. SELECTED PROCUCT LIFE CYCLE PATTERNS
Sales
Time
Time
F. Revival or Nostalgia
Sales
Sales
Time
Time
Time
G. Bust
Sales
E. Seasonal or Fashion
Sales
D. Extended Fad
C. Fad
Sales
B. Boom or Classic
Sales
A. Traditional
Time
Time

6. •Total Company
•Individual
Products
•Total Company Sales

7. Profit per unit
(real dollars)
Product category sales
(real dollars)
How do opportunities evolve
over time? [Exhibit. 8.1]
Life cycle
extension
Profit/unit
Sales
Introduction
Maturity
Growth
Decline or
extension
Competitive
turbulence
Time (years)
Source: Reprinted with permission from p. 60 of Analysis for Strategic Marketing Decisions, by George Day. Copyright © 1986 by West Publishing Company. All rights
reserved.

8. • Introduction
– Innovators/early adopters
• Growth
– Buyers at a maximum
– Repeat sales become more important
• Shakeout
– Sales slow down
• Maturity
– Adopters = dropouts
• Decline
– dropouts > adopters/first time users

9. • Is the product life cycle concept useful? Why
or why not?
– The product life cycle is concerned with the sales
history of a product or product class. The concept holds
that a product’s sales change over time in a predictable
way.
– Each of these stages provides distinct opportunities and
threats, thereby affecting the firm’s strategy as well as
its marketing programs.
– Despite the fact that many new products do not follow
such a prescribed route because of failure, the concept
is valuable in helping management look into the future
and better anticipate what changes will need to be
made in strategic marketing programs.

10. • What are the product life-cycle limitations?
– The product life-cycle model’s major weakness
lies in its normative approach to prescribing
strategies based on assumptions about the
features or characteristics of each stage.
– It fails to take into account that the product
life cycle is driven by market forces expressing
the evolution of consumer preferences (the
market), technology (the product), and
competition (the supply side).

13. Categories of New Products Defined
According to Their Degree of Newness to
the Company and Customers in the Target
Market (Exhibit 8.4.)
High
10%
Newness to the company
20%
New-to-the
world products
New product
lines
26%
26%
Revisions/
improvements to
existing products
11%
Low
Cost
reductions
Additions to
existing product
lines
7%
Repositionings
Low
High
Newness to the market
Source: New Products Management for the 1980s (New York: Booz, Allen & Hamilton, 1982).

16. Discussion Question
1.Is it better to be a market pioneer, or a
follower?

17. •
•
•
•
•
•
•
•
What are the advantages for pioneers?
First choice of market segments and positions
Defines the rules of the game
Distribution advantages
Economies of scale and experience
High switching costs for early adopters
Possibility of positive network effects
Possibility of preempting scarce resources to
suppliers

18. • What are the advantages for followers?
• Ability to take advantage of pioneer’s positioning
mistakes
• Ability to take advantage of pioneer’s product
mistakes
• Ability to take advantage of pioneers marketing
mistakes
• Ability to take advantage of pioneer’s limited
resources

20. Discussion Question
2. When, and for whom, does it make
sense to pursue a pioneer strategy?

21. A pioneering firm stands the best chance for long-term
success in market-share leadership and profitability
when:
• The new product-market is insulated from the entry of
competitors, at least for a while, by strong patent
protection, by proprietary technology (such as a
unique production process), by substantial investment
requirements, or by positive network effects.
• The firm has sufficient size, resources, and
competencies to take full advantage of its pioneering
position and preserve it in the face of later competitive
entries.

22. Discussion Question
3. When, and for whom, does it make
sense to pursue a follower strategy?

23. • A follower will most likely succeed when:
• There are few legal, technological, or
financial barriers to inhibit entry.
• It has sufficient resources or competencies
to overwhelm the pioneer’s early
advantage.

24. Discussion Question
4. If you want to be a pioneer, what are
your strategic options?

25. •
•
•
•
Strategic options for pioneers
Mass-market penetration
Niche penetration
Skimming and early withdrawal

26. • Mass-market Penetration
– Aims at convincing as many potential customers
as possible to adopt the new product quickly to
drive down unit costs and build a large contingent
of loyal customers before competitors enter the
market.
• Niche Penetration
– Focus efforts on a single market segment instead
of pursuing the object of capturing and sustaining
a leading share of the entire market.

27. • Skimming; Early Withdrawal
– Setting a high price and engaging in limited
advertising and promotion to maximize per unit
profits and recover the product’s development
costs as quickly as possible.
– At the same time, the firm may work to develop
new applications for its technology or the next
generation of new technology.
– When competitors enter the market and margins
fall, the firm is ready to cannibalize its own product
with one based on new technology or move on to
new segments.

29. Discussion Question
5.Under what circumstances might each
option be more likely to succeed?

31. Discussion Question
6. How might introductory marketing plans
differ under each of these new market
entry strategies?

34. Pioneer Global Market Strategy
•
•
•
Exporting
Export Merchant (reseller)
Export Agent (commission)
Cooperative Organizations (for several producers)
Contractual Entry Modes
Licensing
Franchising
Contract Manufacturing
Turnkey Construction
Coproduction
Counter trade
Buyback Agreement
Direct Investment
Joint Venture
Sole Investment

35. Some Advice for Would-Be
Pioneers
• First mover advantage is trumped by
pioneers who are better. Best beats first.
Concentrate on being best.
• Being a pioneer without the basis for
sustainable competitive advantage is a
trap!