Exploring the Product Life Cycle: From Introduction to Decline

"To be successful you have to have your heart in your business and your business in your heart"- Thomas Watson Sr.

As a "Caribbean Woman", we don't do things by half

As a Caribbean woman, we do things wholeheartedly.

So when I organized my business mixers - events where female founders at all entrepreneurial stages gathered as "Sisters In Success" to exchange ideas, offer tips, and sometimes rejoice or support each other - we made a grand impact!

Hosting my last event of this type in 2022 has led to affirming relationships and fruitful collaborations. The future remains open: Will I do it again?

Only time will tell.

The Importance of The Product Life Cycle in Strategic Decision-Making and Long-Term Success.

In the dynamic landscape of business, understanding the product life cycle is essential for strategic decision-making and long-term success.

From the captivating initial phase to the unavoidable decline, every stage provides valuable insights into consumer behavior, market trends, and competitive dynamics.

In this blog post , I'll guide you through the five stages, providing tips and strategies that founders can implement to safeguard against obsolescence.

understanding the product life cycle is essential for strategic decision-making and long-term success.

Stage 1: Introduction: Planting the Seed of Innovation:

According to Clayton Christensen, a professor at Harvard Business School, about 30,000 new products are launched on the market each year - highlighting the fierce competition for consumer attention in this stage. 

Despite the resilience of larger corporations with substantial financial resources, they all trace their roots back to a common starting point: the inception of an innovative idea.

In contrast, for smaller businesses and startups focusing on a single product, any shortfall in their offerings typically results in failure, as the demise of the product or service inevitably leads to the collapse of the entire business.

This harsh reality is underscored by the alarming statistic indicating that 92% of startups fail within the initial three years of their establishment.

Maximizing Your Efficiency:

Tip: Research the problem you want to solve.

Uri Levine, serial entrepreneur and founder of Waze and Moovit, refers to this as "falling in love with the problem-not the solution". For founders it involves looking at the problem/pain point from as many angles as possible, including researching the market, industry, competitor and consumer. 

"There's always space for improvement, no matter how long you've been in the business"-Oscar De la Hoya.

Stage 2: Growth: Nurturing Success and Expansion:

During this phase, your product or service starts to gain momentum. Consumers are embracing it, with some even becoming advocates for the brand.

As growth accelerates, sales and profitability also increase, benefiting from economies of scale.

Businesses will now shift their focus towards expanding their market share, improving product features, and optimizing distribution channels in order to leverage the increasing demand.

This is also in line with the projections offered by Statista.com who indicated that in 2023, global retail e-commerce sales reached an estimated USD 5.8 trillion - with a 39% growth over the coming years, and with expectations to surpass USD eight trillion by 2027. 

Maximize Your Efficiency:

Tip: Price your product correctly.

Establish a price that not only meets customers' expectations but also ensures your company generates a satisfactory profit.

To do this successfully requires that you conduct a break-even analysis. This will assist you in finding out how much it actually costs to produce/source a product or create a service. 

As growth increases-so does sales and profitability, as economies of scale are realized.

Stage 3: Maturity: Sustaining Market Leadership:

During this phase, the focus is primarily on stabilizing growth. Your product or service has reached, and in certain instances surpassed, its peak market penetration.

Nevertheless, a drawback of this stage is the escalating competition, resulting in pricing challenges and margin erosion.

Despite these obstacles, mature products have the capacity to sustain substantial revenue streams.

Enhance Your Brand with Strategic Differentiation

Tip: Start investing in brand differentiation. 

This entails creating a strategic roadmap that delineates the methods for monitoring, refining, and scaling innovation effectively. Leveraging cutting-edge technologies like AI enables you to maintain flexibility while investigating ways to enhance processes and synergies, thereby bolstering your solutions, sustaining market dominance, and prolonging the life cycle of your products/services.

"The most successful organizations are the ones that make it easy to do business with them"-Scott Mc Cain.

Stage 4: Saturation: Managing Market Dynamics:

During a recent discussion with a fellow founder, I pointed out that a well-known local beauty brand was rapidly approaching its "maturation stage" and was on the verge of plateauing.

Despite her passionate defense that the brand was raking in profits at an incredible rate, I stood my ground, firmly convinced of my assessment.

Because here's the thing: Today's money is no indicator of tomorrow's money.

Let that sink in.

As market saturation intensifies, sales growth reaches a plateau, and competition grows fiercer. Consequently, even with exceptional performance, encountering diminishing profit margins is inevitable when navigating through commoditization and customer turnover.

According to McKinsey, "the next few years will be a dynamic time for the beauty industry, filled with opportunities and new challenges. Its high profitability, with EBITDA margins of up to 30 percent, will continue to attract new founders and investors to the space."

Unlock Success: Embrace Scalability

Tip: Adopt A Scalable Mindset.

Adjust your viewpoint regarding your product or service to adopt the principle of "designing for scalability."

By doing so, you will enhance its adaptability, allowing it to effectively address emerging challenges and pivot accordingly.

Adjust your viewpoint regarding your product or service to adopt the principle of "designing for scalability."

Stage 5: Decline: Facing the Inevitable:

Sales may experience a decline at this stage due to shifting consumer preferences, technological advancements, or the introduction of disruptive new products in the market.

Despite all efforts to prolong the life cycle of your product or service, there WILL be eventual obsolescence.

Based on industry data, around 90% of consumer goods and services witness a decrease in sales within five years of their introduction. Therefore, it's crucial for companies to make strategic decisions on either gracefully exiting the market or implementing revitalization tactics like expanding product lines or launching targeted marketing initiatives to prolong the decline.

Taking Control of Your ROI: Developing a Tracking and Measurement Process

Tip: Start developing a process for tracking and measuring your ROI.

For example, if you run a professional service, using a billable hour model, allows you to not only track the time you save but also assess how that saved time is utilized. 

"Remember: no matter how good your feedback is, you always start over with the next customer"-Shep Hyken.

Ultimately, the product life cycle represents an inherent evolution that every product experiences, marked by specific phases of development, maturity, and decline.

Through a comprehensive grasp of the unique characteristics of each phase and the implementation of tailored strategies, female founders and small business owners can effectively steer through this process, enhancing the longevity and financial returns of their offerings.

Get ready for even more valuable insights and in-depth analysis in our upcoming blogs!