Product Life Cycle's Later Stages
In the final stages of a product's life cycle, companies often face a decline in sales. However, with strategic planning and innovative approaches, businesses can delay the withdrawal of their products and maximise revenue. Here are some common strategies employed during this critical phase.
One such strategy is niche positioning. By repositioning the product to appeal to a smaller, more specific market segment, companies can extend sales. This often involves tailoring marketing efforts and distribution channels to lower-cost platforms such as email or organic social media.
Another approach is feature refresh and repurposing. Updating or adding new features to a product, or finding new uses for it, can help rekindle interest among both current and new customers.
Cost reduction and scaling back are also crucial. By cutting costs and reducing production, companies can maintain profitability while minimising losses, focusing on a loyal niche customer base.
End-of-life promotions, offering limited-time discounts, bundles, or clearance sales, are effective ways to clear remaining inventory and generate cash flow before eventual withdrawal.
Harvesting or divesting involves gradually reducing investments and extracting remaining profits or selling product rights to another company that might serve different markets or uses.
The use of data analytics, employing AI-powered tools to analyse buying patterns, helps companies make data-driven decisions on whether to rejuvenate, repurpose, or retire the product.
Targeting emerging markets can prolong the product life cycle by expanding into new geographic areas or demographics that may still have demand.
Product differentiation or slight modifications can also revitalise interest without significant new development costs.
During the decline stage, companies face profit pressure due to a slump in revenue as sales volume falls and prices drop. Excess supply increases in the market, pushing prices down even further.
However, the decline stage occurs when all customers in the market have either bought or own the product, and demand comes only from repeated purchases and the replacement of damaged products.
Extension strategies can help companies explore other business opportunities or enter the substitute market. For instance, a desktop computer manufacturer could prolong the decline of sales by developing a substitute product, such as a laptop.
The launch of innovative products can lead to a decline in demand for the original product. For example, the introduction of smartphones led to a rapid decline in Walkman sales due to the embedded Walkman functionality. Similarly, laptops have begun to replace desktop computers due to their portability and similar specifications.
A lower price for a substitute product can stimulate demand and speed up the decline of the current product. As the supply becomes concentrated on a few players during the decline stage, those who lose out during the mature phase exit the market.
In conclusion, companies have a variety of strategies at their disposal to extend the lifespan of their products during the decline stage. By finding new customer bases, reducing costs, or capitalising on remaining enthusiasm, businesses can maximise revenue before exit. The choice of strategy depends on the product’s market potential, profitability, and company goals.
In the context of product decline, companies can capitalize on niche markets by repositioning their product to appeal to specific segments, and tailor their marketing efforts to lower-cost platforms such as email or organic social media.
Moreover, updating or adding new features to a product, or finding new uses for it, can help rekindle interest among both current and new customers, extending the product's life cycle.
