At lot of times when I get questions from business owners in a forum, I have to answer “it depends”, and one of the biggest variables is exactly where their product is in its life cycle.
Products have a series of stages they go though, and the exact tactics you are using depend on where it is.
- Research & Validation
You will see almost every product go through these steps… and some companies as well. Most companies that go out of business are ones that let too many products Decline at once… and a lot of times because they don’t put enough work into Research & Validation.
To keep your business growing, you should have products moving through every stage (though you want to minimize ones in Decline).
Market Research & Validation
This stage feels the least concrete to most people, and as a result is easy to get stuck in. The goal here is to find something you can offer the market that (1) it wants and (2) is better/difference from the competition.
It’s simple to say, but requires attention to detail to pick up on subtle desires in the market and dissatisfaction with other products. It also requires major creativity to figure out ways to meet those desires in a way someone isn’t already.
Validation and research are wrapped around each other. For every idea you come up with from the research, you need to figure out if the potential market is interested and big enough to be worth it.
There is a market for almost anything, but it could cost far more to find them than you would ever make from selling to them.
During this stage, you will work out rough ideas for your product design, pricing, and marketing strategy.
To keep your business growing, you need to constantly be spending time on this stage. You could have several ideas you are researching and several you are validating at any given time.
This is a really brief “launch” stage when you have decided to move a product our of research and want to try to sell it, so you try to build up awareness of the product you are about to release.
Some companies will just list the item and start selling it without any fanfare. That’s fine. If you don’t have a huge mailing list and an active social media following (or a fortune to spend on advertising), that might be the right choice (though it tells you that you need to work on building an email list and a social media following).
Others will go through a launch process first, with a series of emails, hints dropped on various social media outlets, maybe a few ads in other platforms… all meant to build up the hype and get people excited for it.
It really depends on the size and type of following your company has and how unique the product is. You don’t want to hype up a new product and get people excited for it if they could buy something similar from 10 other places before yours is release.
The more unique your product is and the more engaged your followers are, the more likely a launch strategy is to work.
Advertising during this stage is usually very aggressive, trying to get as many customers as possible to begin their customer journey.
Given the amount of effort required, it’s usually a good idea to only launch one product (or product line) at one time.
Growth is a stage that can vary in length… it could be months or it could be years. It’s when a product goes from $0 in revenue to whatever point it will ultimately level out.
Advertising and marketing efforts stay aggressive, trying to build as much momentum as possible.
Depending on the feedback you get from early orders, you may need to make minor adjustments to the product to address any complaints or concerns.
The goal of this stage is to rapidly reach Maturity. As soon as you release, everyone else in the market knows about it and will be trying to catch up to you. You want to become THE person to buy it from as soon as possible.
If a new product’s revenue is not growing, that’s not a good sign for its long-term success. Some products never reach maturity, and go straight into Decline. Usually that’s a sign that the Validation was either rushed or skipped.
This stage ends when the product no longer sees growth every month.
This is usually the longest stage and the least exciting. The product revenue is mostly stable, growing at a rate that is close to inflation. It brings in steady and dependable revenue, so it’s a great place to be.
You want the vast majority of your products to be in this stage.
Once a product reaches this stage, you can leave it alone for the most part (you don’t want to break something that’s working). You can also make minor revisions to it to keep it relevant or appealing to current tastes.
Once you have a product (or product line) in this stage, you need to start splitting your time. Spend a little time keeping these products popular while preparing your next product to move from Research to Launch.
Sometimes a mature product can hit another Growth stage (though it’s not very common). Usually this happens when he product gets some form of broad exposure (like a celebrity posts it).
Advertising campaigns will be relatively stable, with your ads just being reviewed periodically to make sure they are still performing well.
This is the scary one. Almost every product that ever existed reaches it (and the ones that haven’t just aren’t old enough), so you need to have an idea of how you want to handle it before you get there.
This is usually the result of one of two factors:
- Market saturation: so many competitors now offer the same features & benefits that your product does (or perhaps even more), that they are taking away your revenue. It’s also possible that the number of competitors is so high, you are being buried in search results and simply not being found.
- Changing demand: the market’s tastes have changed and they want something different now.
Products in this stage can still be bringing in profitable sales, but you don’t want to chase after them too much.
When a product first starts to decline, an increase in marketing efforts could reverse the decline… for a while. It might keep the product selling but you need to make sure the added expenses is not costing you more than the product generates.
Decline is a little tricky to tell when it starts because sometimes there is huge seasonal variation… almost everyone thinks January is the end of the world after surviving a busy Christmas selling season.
Most products that start to decline are eventually going to reach a point where they no longer sell reliably and you may want to consider discontinuing it.
So that’s the life cycle of a product.
Like the Business Trio and the Customer Journey, this is another major strategic concept you need to keep in mind as you run your business.
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