Page 62 - Duct Tape Marketing

46 Part I: Getting Started in Marketing

ߜ Introductory phase: Build awareness, interest, and market acceptance
while working to change existing market tendencies. Use introductory
offers that motivate prospects to try the product. Drive sales to speed
up your cost/investment recovery.

Though it is tempting to drive early sales through low pricing, be careful
because that first impression will stick and limit your ability to increase
price later. Set the price where it belongs relative to your product value
and gain sales through introductory offers and heavy start-up advertising.

ߜ Growth phase: The product enters this phase once it is adopted by
the first 10 to 20 percent of the market, the market innovators or early
adopters. The masses follow this pace-setting group, and when the masses
start buying, growth takes off. At this point, competitors enter. Consider
promotions and special offers to protect and build market share.

ߜ Maturity: When the product reaches maturity, its sales are at their peak
level and sales growth starts to wind down.

ߜ Saturation phase: The market is now flooded with options. Sales come
largely from replacement purchases. Pricing offers and other incentives
are needed to recruit new customers and win them from competitors.

ߜ Declining phase: When the product reaches the depth of its sales
decline, a business has several choices. One is to abandon the product
in favor of new opportunities, perhaps introducing phaseout pricing to
hasten the cycle closure. Another is to let the product exist on its own
with minor marketing support and, as a result, minor sales expectations.
Yet a third option is to reinvent the product’s usage, application, or dis-
tribution to gain appeal with a new market.

Developing new products

Whether it is to seize a new market opportunity or to offset shrinking sales
with replacement products, one of the most exhilarating aspects of small
business is introducing new products. It’s also one of the most treacherous,
because it involves betting your business resources on a new idea. Figure 3-4
shows the product development process. Follow it, without jumping over the
important middle step, to minimize your risk.

The Chinese character for “crisis” combines characters representing
“danger” and “opportunity.” Proceed with caution to avert danger while you
seize opportunity by adding new products to your line.