The Product Life-Cycle Concept

Because we live and work in a dynamic market situation, managers must accept as the normal state of affairs that all products have a limited life. This fact is commonly expressed in the form of the product life-cycle curve. Products during their existence go through the phases indicated on the curve, as follows:

1. Starting before, sometimes long before, a product reaches the marketplace, there is a development phase. Market research must be undertaken, the product designed, prototypes built, plants laid down. While costs can be very high, income will initially be nil and will probably grow only slowly. Profits are a long way off yet. Many products are slow to ‘catch on’ and this part of the curve typically does not rise steeply.

2. During the growth phase the product reaches general acceptance, and sales increase steeply. Profits mount as development costs are recovered and unit costs decrease with greater volume of production.

3. As the product reaches maturity, initial demand is beginning to be satisfied, competitors may have arrived on the scene, and there will be greater reliance on replacement sales. Sales increase more slowly, and profits come under pressure and may start to decline.

4. When the market is fully saturated, sales will ‘peak off’ and profits decline still further.

5. Finally, sales will go into definite decline and margins come under very severe pressure as it becomes increasingly costly to maintain sales at a reasonable level.

The curve for any particular product may be steeper or flatter, the time-scale may be longer or shorter. Some products seem to go on for a very long time. For this reason the pattern must be applied with care. In addition, we must be careful what we mean by a product in this context: for example, the market for glass has risen steadily over the past 50 years, but within this period the sale of lamp glasses has declined and that of milk bottles has risen steeply (to decline again in some countries in face of competition from waxed cartons or plastic and the change from doorstep delivery to bulk purchase from the supermarket).

Nonetheless the typical pattern stands as a warning that it is dangerous to rely too heavily for too long on one product, so that, as profit from one declines, profit from its successor rises to fill the gap. Ideally this will give a steadily rising profit for the company as a whole, even though some products have entered the ‘decline’ phase of the product life-cycle.

It must be emphasized that the product life-cycle diagram is not a rigid description of exactly how all products always behave. Rather it is an idealized indication of the pattern most products can be expected to follow.

There is nothing fixed about the length of the cycle or the lengths of its various stages. It has been suggested that the length of the cycle is governed by the rate of technical change, the rate of market acceptance and the ease of competitive entry. So, each year numerous new fashion styles are introduced, many of them to last only a few months. At the other extreme, a new aircraft must have many years of life if it is to be commercially worthwhile.

The main importance of the life-cycle concept is to remind us constantly of the three following facts:

1. Products have a limited life;
2. Profit levels are not constant but change throughout a product’s life in a way that is to some extent predictable;
3. Products require a different marketing programme at each stage of their life-cycle.

Implications of the Product Life-cycle

If we have to accept that no product will go on earning profits indefinitely, then we must plan so as to have a whole succession of new products coming ‘through the pipeline’. Peter Drucker has drawn attention to the need to keep all products under review to ensure that not too high a proportion are at the end of their life-cycle. He describes the following six categories:

1. Tomorrow’s breadwinners – new products or today’s breadwinners modified and improved;
2. Today’s breadwinners – the innovations of yesterday;
3. Products capable of becoming net contributors if something drastic is done;
4. Yesterday’s breadwinners – generally products with high volume, but badly fragmented into ‘specials’, small orders and the like;
5. The ‘also raps’ – generally the high hopes of yesterday that, while they did not work out well, nevertheless did not become outright failures;
6. The failures.

Product Elimination

From the product life-cycle concept and Drucker’s analysis of product categories, it follows that all products must be kept under review to assess their present and likely future contribution to profits. A common mistake of marketing management is to keep in the range products that have little or no prospect of contributing to profits. Products are kept in the range until they fade away, meanwhile consuming valuable resources, which could be more profitably utilised elsewhere. These marginal products lower the company’s profitability, and it is essential to control them.

Source: http://en.articlesgratuits.com/the-product-life-cycle-concept-id1560.php

The Sales Page to Product Secret Makes Product Creation Easy

Stumped on product creation?

Have a rough idea bouncing around in your head but not sure what information should be included?

Try this simple method for product ideas, getting through the outline process and final creation.

The way it works is when you have a general product idea in mind you sit down and create the sales letter before you make the actual product. I know you’re thinking this process is backwards from the norm, but I promise you, it’s okay!

This can really work wonders when you’re stuck at the beginning phases of creating a product and can’t find the momentum to get started.

Your sales page will help you flesh out a product as you think of the problems your new item can help solve. It will also act as a very handy product blueprint. Since you haven’t actually made the item, you are free to put in anything you believe will make it an outstanding value to your customers.

Don’t overly stress over the process. Don’t try to make it perfect.. just get things to a point where you can now start fleshing out your info product following the sales letter.

You can use each of your bullet points as topics or chapters to be expanded upon when you do the actual product creation. Remember that you will not be bound by the sales page you make. You can change the features of your product just by modifying the sales page. Your blueprint will then be ready to guide you through step by step till the end.

Here’s another tip:

Get the sales letter up with a subscription form instead of a buy button and send traffic to it from your existing list or through another source such as PPC.

Tell your visitors this particular product is pending release and if they are interested they can subscribe to an early bird alert list. To sweeten the deal offer them a special discount for signing up.

And one more powerful tip:

You may want to make the form extra informative by adding a feedback box where they can leave content ideas. A simple line such as “What information would you like to see included in this product?” can help you further refine the final deal.

If they’re truly interested they will subscribe to the notification list for the product release. If you get no interest then you’ll know not to pursue that particular project.

I wouldn’t suggest you use this for everything you do, but it does have its place. It can give you direction and very valuable feedback when needed.

There may be times when you get a small amount of signups, but not enough to warrant continuing with your idea. If this happens, do not leave those who signed up hanging in the wind. Send them a thank you email and a special gift for their time and feedback. This makes the experience a win-win deal for them and you.

Get Your Brand Visible By Designing Promotional Products

Marketing and branding shouldn’t have one focus. While getting yourself seen on and creating sales through the internet has increased over the last decade, the physical world should not be ignored. Although the return of investment from print advertising has declined, branding through promotional products is still an effective approach for getting seen. Instead of adding your logo and name to any common product, however, consider the items used to promote your business. The items displaying your logo should be moderately associated with your services or products, or they should be general use products that nearly everyone will need.

Finding the right product depends on your industry, as nearly all items can be transformed through an imprinted logo. If your business sells garments, for example, don’t go with paperweights displaying your name. Instead, consider an industry-relevant product such as, in your case, garment bags for traveling.

General products, however, can also make an impact, too, but the product displaying your logo should be one nearly anyone can use. Tote bags, mugs, and pens, because of this, are some of the more popular promotional products for all businesses.

While being industry-specific or all-around useful helps with getting seen, part of branding involves a recognizable image. When thinking about the logo displayed on all products and the color of the products themselves, choose shades that can be instantly identified with your brand. Creating promotional products is not an occasion to be unique. Instead, you want to create an item that everyone will quickly associate with your company or organization.

A third factor to consider is the consumer. Who are you targeting? While many promotional products go to the public, your employees or customers can also display your product. For the general public, consider promotional products that can be quickly and easily be distributed. For your employees or customers, think about items that will be useful on a daily basis.