| Life Cycle
Strategies Craig A. Steffen
Alpha
and Omega. Beginning and end. First and last.
These are concepts familiar to all and more frequently discussed around the
holidays. We recognize the joy of fresh
starts, new jobs, births and marriages. We
usually dread their opposites. Even the
popular children’s movie, The Lion King, took time to convey the concept of “the
cycle of life.”
Most
business people recognize the phrase “product life cycle.” Some are aware that this phrase refers to a time
period over which a product or service moves along a continuum from conception to
discontinuation. A few can even explain in
some detail the four stages of the product life cycle that are commonly identified.
Often
I find that companies either don’t recognize or haven’t fully exploited the
growth and profit opportunities present during each stage of a product’s life cycle.
The
goals for each stage are quite different. To
take advantage of the various stages of the product life cycle you must first decide which
stage each of your products or services is in right now.
Sometimes this can be a rather complex determination, but here are a few
simple guidelines to help you.
1. Development
– immediately follows product release, you’re usually still learning about the
market, are building sales and/or distribution methods and channels and you’re
probably working out kinks in the product itself. Listen
to your customers and assess and adapt quickly. GOALS:
to establish the product in the market and minimize the time spent in this stage.
2. Growth
- you understand the markets, have established your marketing messages and are
experiencing steady unit sales growth (factoring in seasonality and other common
variances.) GOALS: to penetrate the market
and create the sharpest growth curve that can be sustained by your company’s
infrastructure.
3. Maturity
- distribution pipelines are full, all potential customers have been presented with a
compelling marketing message and sales proposition, no new segments or applications can be
identified and unit sales growth has stabilized. GOALS: to dominate the market and prolong
this stage for as long as possible by keeping competitors at bay.
4. Decline
– competitive products or suitable substitutes for your product or service have begun
to erode unit sales numbers. There are no new
customers, market segments or product modifications that can be identified. You’ve observed salesperson and unit sales
performance long enough to determine that the decline is not due to lack of focus or
normal variance. GOALS: to reinvent the
market and replace your own product with a new and better one.
Once
you’ve determined which stage a given product is in, you can incorporate different
strategies to help you to maximize revenue and profit in that stage.
In
the Development Stage the
first priority is an effective product launch. Make
sure that the “splash” you make in launching the product corresponds with the
success you’ve forecasted for the product.
Second, make sure that when demand increases, you can meet that demand
– if you can’t your competitor will. This
is also an education stage. Make sure
everyone fully understands how this product creates a solution for your customers. Common Pitfalls: Thinking you’ll get quicker
market penetration with price discounts in this stage.
This rarely produces the penetration sought and usually erodes the
product’s value in the eyes of your customer.
In
the Growth Stage
you’ll need to get targeted. Invest in
knowing exactly who ALL of the potential customers for the product are. Build a database that captures everything you
learn about your customer as you build a relationship.
Segment your target customers based on what feature/benefit of your product
they care about most. Design your marketing
communications to deliver a meaningful message to each segment you identify. Deliver these messages as directly to the target
customers as possible. Common Pitfalls: No
marketing plan. This usually leads to
spending precious dollars on untargeted “opportunities.”
In
the Maturity Stage
your focus will be on market intelligence and product improvement. How can you use information about your competitors
to stay a step ahead of them as you continue to improve your own product? As with every stage of a product’s life, your
best source of information is your customer; and second is your competitor’s
customer. Remember, the foundation of
marketing is RELATIONSHIPS. You’ll
extend the length of this stage if you use market intelligence effectively. Common Pitfalls: Being so busy with your own
business success that you let your competitor innovate past you.
In
the Decline Stage
your focus and budget shifts to finalizing new product innovation. Redirect marketing and product education dollars
to R&D and introduce your next innovation BEFORE your competitor takes your
marketshare. Concurrently, and for the first
time in the product life cycle, you’ll want to consider price discounts and deals as
a means by which to hold off the competitors. Common
Pitfalls: Being unwilling to admit that a once valued product has begun to decline.
From
beginning to end of every product there are tremendous opportunities to build marketshare,
establish customer relationships and lay the groundwork for the product’s next
generation. Knowledge of, and appropriate
action in, each stage of the product life cycle will help you to create growth faster,
sustain peak sales longer and replace products and revenue systematically. Now, let’s get to work.
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