Linkage between PLC concept and entry strategy


As a new product travels through its life, different firms join the market with their respective versions at different stages. Some join in the early stages, others join midway and yet others join still later. Basically, four distinct entry postures are possible for a firm seeking entry into the market:

v As an ‘innovator’ at the introduction stage in the life cycle of the product.
v As an ‘early follower’ in the early growth stage.
v As a ‘segmenter’ in the late growth stage.
v As a ‘me-too’ in the maturity stage.

Success is possible with all these entry positions, provided the firm has the needed capabilities to handle the market characteristics peculiar to the respective stages.

Entry as Innovator

Innovators should have large resources at their disposal to innovate and introduce new products in the market. They must have the capacity to absorb the cost of product failures. They must also have high-caliber people on the R&D and marketing front. Only those who have all these plus points can afford to take the position of an innovator.

Entry as Early Follower

Those who join the life cycle as followers in the early growth stage of the products have to be good market watchers. They must closely watch the innovators’ programs and if their market intelligence shows that a product introduced by the innovator is picking up well, they should quickly join in with their version. They need not invest heavily in R&D because they essentially copy the innovator. They must, however has an organization capable of putting a new product into the market at short notice.

Entry as Segmenter

The segmenters enter with their brands still later, i.e. when the product enters the late growth stage. They identify certain market segments with less competition and concentrate on them; they

bring in products that are appropriately modified to suit the selected segments. They are highly cost-conscious in their manufacturing and marketing programs as they know that as late entrants they cannot recover extra costs.

Entry as ‘me-too’

The me-too firms enter with their versions at a time the product enters the maturity stage of its life cycle. These firms do not need much R&D efforts. But, they need a strong marketing organization to compete with the already established competitors. They normally compete on price, keeping their costs as low as possible. Production cost is their main concern and all their decisions, including those on product features and design, are dominated by the concern to reduce production cost.