The Product Life-Cycle Concept

Because we live and work in a dynamic market situation, managers must accept as the normal state of affairs that all products have a limited life. This fact is commonly expressed in the form of the product life-cycle curve. Products during their existence go through the phases indicated on the curve, as follows:

1. Starting before, sometimes long before, a product reaches the marketplace, there is a development phase. Market research must be undertaken, the product designed, prototypes built, plants laid down. While costs can be very high, income will initially be nil and will probably grow only slowly. Profits are a long way off yet. Many products are slow to ‘catch on’ and this part of the curve typically does not rise steeply.

2. During the growth phase the product reaches general acceptance, and sales increase steeply. Profits mount as development costs are recovered and unit costs decrease with greater volume of production.

3. As the product reaches maturity, initial demand is beginning to be satisfied, competitors may have arrived on the scene, and there will be greater reliance on replacement sales. Sales increase more slowly, and profits come under pressure and may start to decline.

4. When the market is fully saturated, sales will ‘peak off’ and profits decline still further.

5. Finally, sales will go into definite decline and margins come under very severe pressure as it becomes increasingly costly to maintain sales at a reasonable level.

The curve for any particular product may be steeper or flatter, the time-scale may be longer or shorter. Some products seem to go on for a very long time. For this reason the pattern must be applied with care. In addition, we must be careful what we mean by a product in this context: for example, the market for glass has risen steadily over the past 50 years, but within this period the sale of lamp glasses has declined and that of milk bottles has risen steeply (to decline again in some countries in face of competition from waxed cartons or plastic and the change from doorstep delivery to bulk purchase from the supermarket).

Nonetheless the typical pattern stands as a warning that it is dangerous to rely too heavily for too long on one product, so that, as profit from one declines, profit from its successor rises to fill the gap. Ideally this will give a steadily rising profit for the company as a whole, even though some products have entered the ‘decline’ phase of the product life-cycle.

It must be emphasized that the product life-cycle diagram is not a rigid description of exactly how all products always behave. Rather it is an idealized indication of the pattern most products can be expected to follow.

There is nothing fixed about the length of the cycle or the lengths of its various stages. It has been suggested that the length of the cycle is governed by the rate of technical change, the rate of market acceptance and the ease of competitive entry. So, each year numerous new fashion styles are introduced, many of them to last only a few months. At the other extreme, a new aircraft must have many years of life if it is to be commercially worthwhile.

The main importance of the life-cycle concept is to remind us constantly of the three following facts:

1. Products have a limited life;
2. Profit levels are not constant but change throughout a product’s life in a way that is to some extent predictable;
3. Products require a different marketing programme at each stage of their life-cycle.

Implications of the Product Life-cycle

If we have to accept that no product will go on earning profits indefinitely, then we must plan so as to have a whole succession of new products coming ‘through the pipeline’. Peter Drucker has drawn attention to the need to keep all products under review to ensure that not too high a proportion are at the end of their life-cycle. He describes the following six categories:

1. Tomorrow’s breadwinners – new products or today’s breadwinners modified and improved;
2. Today’s breadwinners – the innovations of yesterday;
3. Products capable of becoming net contributors if something drastic is done;
4. Yesterday’s breadwinners – generally products with high volume, but badly fragmented into ‘specials’, small orders and the like;
5. The ‘also raps’ – generally the high hopes of yesterday that, while they did not work out well, nevertheless did not become outright failures;
6. The failures.

Product Elimination

From the product life-cycle concept and Drucker’s analysis of product categories, it follows that all products must be kept under review to assess their present and likely future contribution to profits. A common mistake of marketing management is to keep in the range products that have little or no prospect of contributing to profits. Products are kept in the range until they fade away, meanwhile consuming valuable resources, which could be more profitably utilised elsewhere. These marginal products lower the company’s profitability, and it is essential to control them.

Source: http://en.articlesgratuits.com/the-product-life-cycle-concept-id1560.php

Enhance Your Marketing Through Personal Products Promotion

If you are in sales, great customer service and product knowledge are the basic foundation to your success. These skills will undoubtedly increase your production and earnings over time, but growing your business by word of mouth advertising and through past customers referrals will take time. Adding marketing and promotional products to promote your business will be an effective compliment to expand your business faster.

If you are in the financial or real estate business, after you have completed a transaction and your customer is happy with your service, they may tell their friends and family for a few weeks. Unfortunately, after a few weeks the referrals will likely stop unless you maintain contact with them. A strong marketing and promotional campaign is a vital key to keeping up with your competition. Promotional campaigns use products that have your name, logo, and contact information on them to help you grow your business and develop recognition in your marketplace. When calling on your lead sources make your sales calls more effective and lasting by offering them useful products that will promote your services. Typical promotional products such as: pens, cups, flash lights, tape measures, and stress balls are all useful items in the real estate and financial industries. If you add a promotional campaign to your marketing endeavors, you should be able to lengthen the time your past customers and lead sources promote you and your business, thereby retaining a higher percentage of your past customers.

Promotional items will also assist you in introducing a new services or products that you may want to offer. These new products and services may help you specialize and become more profitable. Becoming an expert in rehabilitation loans, first time home buyer down payment assistance loans, or zero down payment mortgage products and promoting your expertise through marketing and promotional products campaigns will decrease the time needed to capture new business and profits. You can create a marketing promotional campaign to maintain contact with past customers, reach out to new customers at events, or more effectively promote yourself through your sphere of influence. Creating an effective promotional marketing campaign will help you and your contacts spread the news of what you can offer. Promotional items should fit your business needs and can be used as closing gifts, informational pieces, generalized marketing, and employee retention and motivation.

Creating an all-encompassing marketing system should utilize all aspects of personal promotion to reach your lead sources, these include: seminars, product knowledge, outstanding customers service, consistent contact, and retention systems to maximize your efforts. Developing a total marketing plan will enhanced your overall image as an expert and increases the likelihood that they will recommend their connections to you.

Three Measures Of Personal Productivity

Most of the talk about performance measures is how they are applied to monitor the performance of an organization, a business, staff, a project, or a process.

But have you ever used performance measures for your own personal performance? One area that really lends itself to being measured is personal productivity. This is about how well we use our time to achieve whatever goals we’ve set. Of course, it virtually goes without saying (but let’s say it anyway), if you have no goals then you have no way of assessing your productivity!

Personal productivity is something we all have to deal with, particularly when there are personal goals we’re striving for, and no end of obstacles and distractions getting in the way of our striving!

So here’s a handful of measures, over which you might like to ponder with the question “would it be useful for me to know this?”

Return on time invested (nickname is ROTI)

You have to define what the “return” is for you, and how you’ll quantify it. Then you just divide that quantity by the number of hours (or days or whatever) that you’ve invested in generating that return.

If you’re a consultant or solo business owner, for example, your return might be profit. So you could measure the profit your business earns for every hour you invest in your business.

It’s a measure that easily leads you to the question “which activities give me the highest return, and how can I do more of those activities?”

Percentage of time spent on priorities

Do you know what your priorities are? Can you recognise when you’re working on them, as opposed to things that aren’t a priority?

If you can, then by keeping simple records in your Outlook Calendar or diary, you can easily tally up the proportion of your time each week that you gave to your highest priority tasks.

It’s a great measure to really appreciate the extent to which we can let distractions and other people’s priorities invade our time.

Task cycle time

If there are tasks that you perform time and again, such as preparing for meetings or writing a specific type of report, or recruiting staff, then a little careful analysis might highlight where you can save time that’s currently being wasted.

It happens to the best of us – we get carried away with how things are done, and forget to check for better ways of doing them. Measuring the cycle time of your regular tasks can encourage you to ask this question (and hopefully find ways to improve your personal productivity).

These aren’t the only measures of personal productivity, of course. But if you’re currently measuring nothing about how well you use your time to achieve whatever goals you’ve set, could one or more of these be a good place to start?