The Product Life Cycle
Apart from the all-important Business Plan, even those among us with the attention span of a gnat would do well to at least pay passing attention to understanding the Product Life Cycle, an important principle determining success or failure. Of the many Business and Economic concepts, Harvard University can dream up there are a few very basic ones, and these are two of them, that I have found to be invaluable.
Having said that, I will attempt to translate the incomprehensible and alien language of finance, unless you’re a grey little man with a bowler hat, into words that are at least vaguely recognisable.
Understanding the Product Life Cycle – the key to success or failure. Of all the various unfathomable economic principles I have encountered over the years, by far the most easily understood, and practical has been this one. By substituting the word “Business” for “Product” this theory served as a Dummies Guide to the various developmental stages, or lack thereof, of both.
What is so often overlooked, not understood, or simply ignored in this simple principle, is what the various stages actually mean. Reverting back to my “Dummies” approach the following is relevant:-
Research, Viability, Costing etc – in short – Business Planning ! – this is the absolutely crucial bit NOT shown on the diagram above as it happens below the timeline. If this process is flawed or worse, doesn’t happen, then the risk of all the other stages not getting out the starting blocks are extremely high to probable. At the risk of boring repetition, ignore this element at your peril !
Sales Volume and Time scales – these vary depending on the product. Compare the life-time scale of a new cell phone to say, the VW Beetle. The former has a short time span whereas the latter seemed to go on forever – see below under Maturity.
Introduction – the period of product introduction to the market place, which is the acid test for the marketing and advertising strategy. If this fails “do not pass go, do not collect 200 bucks” 😱
Growth – if all has gone well with the introduction stage and the product has become established then growth together with higher sales, equals more loot. Lubbly Jubbly – so far so good and all looks rosy.
Maturity – eventually, no matter how well-received, successful a product is, it will have a shelf life where it either needs revamping or replacing altogether. It’s en route to the highest point of the maturity phase that the forward thinkers will have planned. Inertia on part of the business owner will see the inevitable decline setting in, which will result in an eventual wipe out either of product, business, or both.
Back to the examples of cell phone and VW Beetle. The “trick” in both cases is to foresee a change is needed, and proactively take action to redesign and introduce an updated, or totally new version of the product. How many revamps of Samsung cell phones have happened over a very short time? VW had the concept down to a fine art over many years with their iconic Beetle. These are merely examples of two Companies who activated the “trick” close to the top of the maturity cycle, and guess what? – kicked off the complete Life Cycle process all over again. Clever heh, but not rocket science 😎
Decline – self-explanatory, with the crash and burn ending inevitable if the maturity stage is not managed effectively.
Life Observation – I have often thought that the business principle above can be applied to “Life” itself, with two differences:- 1. Initially, I equated the conceptual stage before birth to planning and “research” by the potential parents. However, thinking of some individuals I have known over the years it’s very clear that this phase was totally ignored ! 2. No matter how hard one tries, the “trick” to realise the concept of Methuselah will never be achieved.
Supplementary Information – for those wishing to torture themselves further with more detail perhaps start with this link:- http://www.quickmba.com/marketing/product/lifecycle/