The Product Lifecycle: From First Prototype To Continued Profitability
If your background is in marketing, then the term “product lifecycle” is probably fairly familiar. This concept is important to be aware of when you are in product marketing, as it directly impacts the bottom line of your business.
If you aren’t aware of the product lifecycle concept, there’s no time like the present to learn. Having a better understanding of this cycle will help you plan for times when your product is no longer viable, or the marketing strategy needs refreshing. Here’s how it works, from your first prototype to continued profitability.
The Introduction Phase is the first of four generalized phases of the product lifecycle. This is the time that a business spends researching, developing, and ultimately launching the product. This phase can take months or even years to complete initially.
When you’re in the Introduction Phase, you’ll be working hard to fine tune the product. This may include conducting lots of primary and secondary research regarding market demand, as well as looking for innovative ways to bring the product to fruition. For example, you may decide to develop your plans on paper then use Injection Molding Services China – 3ERP to create a prototype.
When prototyping is done, you may work on beta testing or a small production run to get a better feel for how things will go when you launch. Marketing strategies and materials are also getting finalized around this time. Then, you go public with your product and enter phase two.
The Growth Phase is when your sales are rapidly growing, and you’re approaching the peak of the product lifecycle. At this time, your economy of scale is working to your liking and profitability is great. Ideally, you want to stay in this phase for as long as possible.
Advertising usually makes up a significant portion of the budget as the first phase becomes the second. Now is the time to shift the focus from convincing people that you have a new and innovative product to set yourself apart in other ways. Keep an eye on your competition during this phase, and constantly be conducting SWOT analyses to assess their strengths, weaknesses, opportunities, and threats.
By the second phase, your product has started to gain you some brand recognition. If you don’t already have someone working on future innovations, you should. In fact, if you have product ideas continuously coming through the funnel, you are setting yourself up for success.
Growth is leveling out. Your product has peaked, and soon you will face a decline, meaning a decrease in sales and profitability. You have saturated the market and everyone who wants your product already has it. You may also be seeing new competitors in the market who are coming into their growth phase, therefore taking a piece of your market share.
Now is the time to start looking at different ways to market your product and reach new customers. This might mean a new advertising strategy that targets a different consumer group or reminds present consumers why they like your product so much. You may look at reducing the cost to maintain profitability at a lower margin for a bit longer. Alternatively, you could add more value to the product at the same cost, piquing the interest of those who were on the fence about buying.
You’ve reached your peak and now your sales are starting to decrease, taking your profitability down with them. You find yourself between a rock and a hard place, knowing that there are still a few loyal customers who would walk away if you stopped production altogether.
By now, you should have a new product prototyped, tested, and ready to launch. The majority of your budget will be going into this new product, as it has the most potential for keeping your business moving forward. This might mean being creative when it comes to continuing production of your old product, such as looking at new suppliers or outsourcing production to reduce your cost.
If you have enough brand recognition, you may end up with a legacy product that remains the go-to for years to come. For this to happen, your product needs to be sensational. For example, consider Mr. Clean brand Magic Erasers. The product has been on the market for over a decade and is still the go-to product over its competitors.
To be in business for the long run, you need to understand the inner workings of the product lifecycle and time your product launches accordingly. Do so, and you will always have something making you money.