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Countless products are launched every year, landing in the market with a reason to be, a well thought out way to connect with the consumer and hope that the investment will pay off for the brand owner. But what comes next?
Product Life Cycle Management is the key to ensuring your brand thrives year in and year out. This post will help you understand its importance to your marketing strategy and give you the tools you need to identify the different stages of your products life cycle and strategies to maximise growth throughout.
What is Product Life Cycle Management?
I love a good analogy as much as the next marketer and this one was just too hard to resist.
Think of your product like roses in your garden, it is not enough to simply plant (your new product in the market), water it (with promotions occasionally) and expect it to flower year after year. At some point, its vitality is going to dwindle and you need to either deadhead them or dig them up and start again.
The product life cycle (PLC) refers to the stages a product travels through from launch to eventual obsolescence. Managing the PLC is an important part of your marketing strategy and guides you in adapting your approach by product, to ensure you are promoting, developing and phasing out products at the right time.
Four Stages of the Product Life Cycle
This is identified as the launch stage of your new product. Sales are increasing slowly, as there is currently limited awareness. Costs are high with large amounts of advertising and promotion required as well as the product development and production costs having been incurred.
The introduction stage will see your business operating at a loss and so this is the most critical stage in your product lifecycle, ideally you want to move through this stage quickly. Understandably this is where the highest percentage of failure occurs.
Strategies for success during the introduction phase:
- Clearly define your market so that at launch you are effectively targeting the consumer most likely to become your customer
- Build a dominant market position, stand out from your competition, don’t just be a “me too” product, have a unique reason for consumers to connect with over the competition
- Pioneer something; be the first to launch, a true new product is rare but valuable (See Ideas and Innovation).
Once awareness has increased and with an appropriate distribution strategy, you will identify that your product is in growth, which will be when you first break even (this will be discussed in next week’s post on Measuring Success) and begin to make a profit.
When your product is in growth, the market has accepted your product and consumers are trialling it. This is the time to increase your distribution to make sure you are matching supply of your product with demand.
During growth, naturally, competitors will enter the market. Noticing a new popular product will motivate them to launch similar products in order to capture some of the market (see Get Competitive with your Competitors).
Strategies for success during the growth stage:
- Monitor pricing to ensure you stay competitive against new competitive offers
- Confirm your actual customer matches your forecasted target customer and adjust your message. For example we have a launched a building and construction product for children, but on researching sales we find out it is popular amongst teens. We therefore want to ensure our marketing and promotions do not exclude teens by being too “childish”
- Look for new distribution channels – use your sales history to sell the product in and growth your market share
Your product can be identified as being in its maturity phase when sales volume slows down and beings to plateau, that is becomes “stuck” at a certain level, stops growing and may be just slightly declining. This is the sign that action is needed or your product will begin to rapidly decline.
Products reach maturity for various reasons including competition reaching saturation, price wars giving unpredictable volume (this week’s special gets the sale) and the initial excitement for the product settling. This leads of course to a decrease in profit, both from a decrease in sales but also from an increase in promotional expenditure.
Strategies for success during the maturity stage:
- Apple is the first company that comes to mind that demonstrates innovative product lifecycle management. Realising most mobile phone users are on 18 – 24 month contracts, Apple releases a new modified iPhone around every 18-24 months, by addressing that the current model is reaching maturity and releasing an update they effectively refresh the product lifecycle back to introduction and growth every two years. The result is a loyal following that feels they are up to date with the latest technology and will not move to a competitive offer
- The Apple example illustrates the strategy of modify or relaunch. Create new news and interest around your product. Survey your customers (See Market Research ) to find out what is missing from your product; monitor your competition (see Get Competitive with your Competitors) and find out your competitive gaps; re launch your product to recapture market share and return your product to growth
- Look for new users or new uses for your existing product and develop strategies to communicate and increase awareness for your product with these groups
- Create new promotions, competitions and offers to maximise sales of your product while it is in its maturity phase
This phase is identified by both a decline in sales volume and tapering off of profits. Allowing the product to reach decline should be strategic, meaning you identified the product in maturity and planned that it would not be refreshed, but instead would be deleted at some point in the future.
The choice to let a product decline can be as there is a new product planned for launch which will replace the current product but is not going to be positioned as an update or refresh.
Strategies to minimise loss during decline:
- Minimise spending promotionally rather than trying to stimulate sales with competitions and discounts, allow sales to taper off naturally
- Decrease the number of SKUs over time, so delete the worst performing sizes or colours first so you have a tighter offering in the market, then gradually run out of the product
The most important advice for using PLC management in your marketing strategy is to regularly review your sales volume and profitability; this is where the flags will be going up that will help you identify what stage your product is in, allowing you to plan your products life more effectively.
What stage in product life cycle is your product in? What are you planning to do, to maximise that stage?
Until next week L is for the life cycle of your products and also for the lifecycle of the rose, which evidently go from maturity back to growth every year, if only we could bottle that ability!