Product Lifecycle Introduction Stage: How to Succeed
You've probably heard that a good start is half the battle. This proverb describes the introduction stage in the product lifecycle.
Launching a startup onto the market raises many doubts and involves risk.
What awaits me at the introduction stage? What should I do if I fail? Why do startups fail? How can I ensure my product doesn't stall at the very beginning of its life? Probably these and some other questions come to your mind when you are about to launch a new product.
In this article, we will find answers to these questions. Let's start with the main characteristics of the introduction period.
Key Characteristics
The product or brand lifecycle consists of four stages, and the first is the introduction period. How to determine if your product is in the introduction stage? Simple: as soon as you launch it on the market and are ready to start sales, you are already there.
Sometimes the research and development stage is highlighted, which precedes introduction. At this time, you have an idea for a product or service and begin working on it with a team of researchers, designers, and product developers. However, once the product is ready for sale, the introduction stage begins.
Introduction is considered a risky stage that can bring either very significant gains or losses in subsequent stages of product development. Its main characteristics are:
- Low sales volume. When a new product is in the introduction stage, awareness is low and sales grow slowly.
- High costs. To increase sales, you need to introduce as many people as possible to your product. You need to monitor the audience's reaction to your product, look for various distribution channels. These actions require ongoing costs.
- Low competition. A big advantage of this period is low competition or even its absence. This allows you to set a favorable price and achieve a monopoly.
- Low profitability. Even if, with highly effective marketing, sales grow quickly at this stage, it is not enough to cover the costs of production and promotion.
It is not advisable to prolong the introduction period, as its main goal is to create sufficient product awareness to transition to the growth stage. To do this quickly and effectively, you need to know what problems you may encounter at this stage.
Challenges in the Introduction Stage
If your product is in the introduction stage, it means it is new and nobody has heard of it yet. You are just beginning to find out whether the audience accepts the concept of your service. This circumstance creates certain difficulties that your startup will have to face.
Substantial Investments
The first big problem is having enough funds to bring the product to market. You have probably already spent a fortune on your project during the development stage. Of course, you cannot expect it to start generating profit immediately. Be patient; further success requires substantial investments.
Not all buyers will know about your product at the beginning of its life; moreover, most of the target audience will not know about it. You will have to spend significant amounts on implementing advertising strategies to spread information about the product among potential customers.
Also, at this stage, do not forget about the distribution budget. Appearing in front of the buyer in the right place increases the likelihood of sales. There are various online distribution channels such as Amazon, eBay, Instagram, etc. Testing these platforms to choose the best option for your product costs money.
Lack of Profit or Initial Losses
The second problem is the lack of profit or losses at the initial stage. Initially, demand for the launched product is low. As mentioned above, most expenses go to advertising and promotion. Therefore, the product is not yet profitable. Even if sales are growing, they do not generate profit but only cover promotion costs. You must be ready to overcome this period to move to the next stage. Monitor growth rates to ensure the company's revenues are increasing and you are moving in the right direction.
Small Market
The third objection is a small market. When you first launch a product, you start selling it to "early adopters." People will not compare your product with others, so you need to create primary demand. Being a pioneer means taking risks, finding distribution channels, testing the target audience, and attracting their attention. It is clear that in such conditions, sales usually grow slowly and there is no guarantee of success.
Even considering all the risks, entrepreneurs make mistakes that lead to project failure at the initial stage.
Common Mistakes in the Introduction Stage
At the beginning of the article, we already mentioned that 90% of new projects ultimately fail. Let's understand the reasons for this disappointing statistics so that we can anticipate them before creating a product.
Product Does Not Meet Customer Needs
The main reason why companies in the introduction stage drop out is creating a product that nobody needs. Of course, the founders have done a huge amount of work developing their idea, but buyers want their problems solved and will not pay money for unnecessary things.
Lack of Funding
Very often, new projects close because they run out of money. Properly allocating funds among each component of the project is a difficult task.
If you have read this far, you understand that at the initial cycle, launching a new product requires large expenses for promotion and distribution. The mistake that companies usually make is that they do not calculate the cost spent on acquiring a customer compared to the value that customer brings. The first indicator should never exceed the second. Otherwise, you risk incurring losses.
Poorly Chosen Team
The next mistake that can be made at the very beginning of the product lifecycle is selecting the wrong people for the team. No business will be profitable based solely on an idea; it is execution that contributes to the future success of the product. The people you work with should be versatile and possess various skills. Sometimes the founder thinks they can run the project only with a technical team. They try to handle all other responsibilities themselves. Remember that managing a startup includes not only engineering but also many business aspects, and it is very difficult for one person to handle it all.
When building a team, it is better to be responsible and ensure that each member performs their job.
Underestimating Competitors
Indeed, one of the key features of the initial stage is a low level of competition. However, complete lack of attention to competitors can lead to the failure of your startup.
If the launched product is interesting and people start paying attention to it, rest assured that very soon similar offers will appear on the market.
If you decide to create a competitive product, be prepared that it will be difficult to make people switch from their usual service.
Studying "red ocean" and "blue ocean" strategies will help you deal with competition.
How to Prevent the Failure of Your Startup
You must understand that there is no secret key that will necessarily save your startup. It's all about being passionate about your idea and working hard. Nevertheless, there are a few recommendations that can help.
Creating a Business Plan
Writing a business plan is very important because it can help with other aspects that we will discuss later in this section. Consider the plan as a map that leads you to the final goal - turning the startup into a profitable business. A well-prepared business plan will tell you how to manage the project and develop it successfully. Usually, the plan describes up to 5 years of the product's life.
You can divide it into several parts, that is, separate marketing goals from sales goals, etc. This will help you see an objective picture of your business and suggest the right decisions for further project development.
A business plan is also very useful for attracting investments. It helps convince a potential partner that the project is profitable and worth their attention. Funding is the next key to preventing startup failure.
Ensure Adequate Funding
It is clear that doing business without sufficient capital is impossible. The amount needed for a startup varies across industries and ranges from a few thousand rubles to several million. Writing a business plan will help determine the amount of costs for your specific case. The question is where to get this money?
The main source of funding is personal savings. Very often, the necessary costs turn out to be much higher than the entrepreneur originally calculated. Here again, your business plan comes in handy. It usually contains a financial plan that lists alternative sources of funding.
If you need to find investors, you can turn to your friends or relatives. You can also post information about your idea on special platforms for finding investors, such as Product Hunt, Angellist, Republic, etc.
Please note that before presenting your startup to investors, make sure you have an effective pitch deck design. This will help make the right impression and immediately convey the essence of your project.
Once you have found enough money for your startup, you can think about the next aspect.
Consulting with Experts
Most startups at the beginning of their life have a small team. Typically, the team consists of no more than 5 people. This could be the founder, a few employees, and sometimes a manager.
Building a business involves not only creating a product or service. You need to register the company, obtain a federal tax number, and solve many other financial and legal issues. That is why before launching the product, it will be useful to consult with a lawyer, accountant, and financial expert. These people will help you save money and explain your obligations and responsibilities.
They may not be part of your team, but consulting with experts will help your business avoid unpleasant problems in the long run.
Take Care of the Marketing Aspect
We have already said that having a great product is very important, but it will be useless if no one knows about it.
Traditional ways of promotion, such as paper advertisements, TV commercials, billboards, etc., are quite expensive and not as effective in today's digital world. You need to learn more about SEO, SMM, SEM, email marketing, content marketing, and other digital marketing technologies. Distribute the promotion budget among different channels to reach a larger number of people.
Another recommendation is to carefully design your website. If the advertising campaign is effective and the lead is interested in your services, a properly designed page encourages the user to try your service/product.
Conclusion
Launching a product onto the market is not an easy task. There will always be situations that you cannot predict and control. Nevertheless, if you take into account all the advice from this article, you will be one step closer to a successful startup launch. And the difficulties and challenges that arise during the introduction stage will give you valuable experience that will be useful later in the growth stage.