Certified Supply Chain Professional (CSCP) Practice Exam

During the introduction stage, what is a significant expense faced by businesses?

1. Logistics optimization

2. High promotional costs

3. Customer loyalty programs

4. Product development fees

The correct answer is: High promotional costs

The choice related to high promotional costs is indeed significant during the introduction stage of a product's lifecycle. During this phase, businesses aim to build product awareness and attract initial customers. As a result, substantial investment in advertising and promotional activities is essential to inform potential buyers about the new product's existence and benefits, thereby driving early adoption. Effective marketing strategies are crucial in creating demand and establishing a market presence, which often translates into high promotional expenditures. In contrast, while logistics optimization, customer loyalty programs, and product development fees can also incur costs, they are generally less pronounced in the introduction stage compared to the need for effective promotion. Logistics optimization might be more relevant in later stages when refining supply chain operations post-launch, while customer loyalty programs are typically developed once the customer base is established. Product development fees are incurred prior to the product introduction and thus do not represent a challenge during the introduction itself. Consequently, high promotional costs stand out as a primary concern in this particular stage.