What is the product lifecycle?
Many of us have heard of the Boston Matrix, “cash cows” “rising stars” and so on, however whilst we understand the principle do not build it in to our day to day business. Managing the product lifecycle and using your understanding of this to ensure the longevity of your business is critical to long term success.
For each of our products and services, we should have a thorough understanding of where they are in their product life cycle, is the market for them still growing and developing, is it at its peak or is it already in its downward spiral? We should also have an understanding of what this means for the future of our business, if the product or service which we rely on to make the majority of the profits in our business is on a downward trajectory, that spells trouble and we should be focusing our efforts on other areas of our portfolio and product development.
Determining your place in the product lifecycle
Here are 3 questions you can use for assessing your products and services using the product lifecycle;
What pattern are you seeing in your sales? Are they rising, stagnant or falling?
What are your profit margins doing? Are they rising, stagnant or falling?
How profitable are you products and services? Which ones make you the most money?
Use the answers to these three questions to prioritise your product/services when you are allocating resources. By resources I mean time as well as money. If you have a product or service which is extremely profitable and has a growing market, this is where you should be spending your time, not on one of your older, potentially “classic” products which no longer has a stable market. This may seem like common sense but it can be incredible hard to be that brutally honest with yourself and your business and let go of the products or services that you are emotionally invested in. Use the numbers and the patterns to drive your behaviour, and be brutal about it! If you need help our Business Accelerator Programme might be of interest.