Section 15 Product life cycle

February 7th, 2013 Leave a comment Go to comments
WINNERS = Products which have a minimum life cycle at least one minute longer than the payback period, and ideally one minute longer than your own lifespan.

When I speak of product life cycle I refer to the time period from its first sale, through its last sale.  You can think of it as you would the flight of an airplane, first comes the takeoff and climb, then the leveling-off period, the descent, and finally the landing or last shipment.

There are four stages of product life cycle:

1.  Product introduction

2.  Growth (sales increase)

3.  Maturity (sales level off)

4.  Decline (sales taper down)

There are fad items which are here today and gone tomorrow and there are extended life products which I would define as a product which can be sold in quantities for more than five years.

A short product life cycle is not necessarily negative.  Some products have very short but very lucrative life cycles.  My friend George Coakley, who was the marketing genius behind the Pet Rock can attest to that.  Their revenue graph looked like a pyramid.  Straight up one side and straight down the other side.  The payoff was that when it reached the top, it was in the millions of dollars.  When it was over, they had only a few rocks left.  They had no excess inventory!  The ideal fad product.

Each different product has a different life cycle that calls for a different marketing, promotional, and funding strategy.  With some products, EACH STAGE of its life cycle calls for different strategies.

Naturally, any innovations you can add to your product that improve its performance or increase its benefits will add to its life cycle.  Just think of all the times you have seen “NEW, Improved” on a product’s packaging.  Those are attempts to extend a product’s life cycle, by getting you to try it again, even if you are tired of the product.  If a product has no competition, the developer may want to introduce it with less features than originally intended, in order to be able to extend its life cycle by incorporating the additional features at a later date and re-introducing the product.  This is especially enticing if the product will experience strong sales without the additional features, and if the features can be added at a later date without costly tooling changes.

On a fad item, you should expect to invest the majority of your money in a short well-focused, aggressive advertising campaign meant to prompt an immediate purchase and on rapid distribution of the product.  The manufacturing and facility investments should be minimized and use of outside contract manufacturers maximized.

On an extended life product, the strategy may be reversed and the majority of money would be spent on a facility and equipment to produce the product.  The advertising program would then be long term and be meant to be more technical and more informative, and aimed at building a long term relationship with the customer.  In industry terms this is “building brand name loyalty”.

It is important to estimate your product’s life cycle as accurately as possible.  Be objective!



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