How to manage the product lifecycle

According to the concept of T. Levitta, all goods and services go through several stages of development, from introduction to sales decline. Each stage has individual features that must be taken into account when forming a marketing strategy. If this is not done, product promotion will become less effective, and the growth in popularity will slow down or stop sooner than necessary. So how to manage the product lifecycleso that they stay on the crest of the success wave for as long as possible?

The main nuances of the concept

In total, there are 4 stages that a product goes through after development:

1. Market appearance. At this stage, the target audience is introduced to a new product or service. It is important for the company not only to attract customer interest, but also to create a positive impression about the product.
2. Growth or development. The stage is characterized by an increase in the popularity of the product or service being promoted, an increase in sales and profits. The company's goal is to reach the maximum market share: this will help to take a strong position among competitors and gain the trust of the mass consumer. The latter becomes more difficult because the longer the product is on the market, the more stringent the customer's requirements become. Clients tend to expect more, so it's important to pay maximum attention to feedback at the growth stage.
3. Maturity. At this stage, the product's popularity is at its peak, and sales growth is gradually slowing down. The market is getting saturated, the competition is getting tougher, so the company has to make additional efforts to maintain its positions. These measures must be taken into account in the marketing strategy.
4. Sales decline. At the last stage, a product or service becomes less popular, as new, more interesting offers appear on the market. In some cases, this stage can be extended; in others, it is important to withdraw the product from the market in time to minimize losses.

The importance of VCT in retail

Specialists of any firm should be guided by this concept. It helps optimize marketing strategy, inventory management, and pricing. An entrepreneur also needs a product life cycle in order to understand which product in stock should be kept on the market for as long as possible, and which one will soon have to be withdrawn, since it is designed to “skip the cream”, i.e. make a quick profit and fall in popularity just as quickly.

In addition, working with the VCT, you can obtain information that will help you decide whether to expand the product line, modify the product, work on innovations in this area, etc.

Management principles

To understand how to manage the product lifecycle, it is worth studying the main criteria that must be met.

Forecasting

This is one of the basic elements that is used even before implementation and is used until the product is withdrawn from circulation. The more accurate the forecasts are, the more effective production planning and inventory management will be; they also affect the productivity of the marketing campaign. Based on this information, they decide whether to extend production or withdraw goods from the market. For forecasts, expert assessments are used, mathematical models are built and data analysis is done.

Adaptation

Any product or service must be sensitive to changes in the needs and expectations of the target audience. To make the product more adaptable, the company can upgrade it, release new versions, and change its positioning. Such measures help extend the HCT and maintain its competitive position.

Differentiation

This principle is especially important when the product or service being promoted comes to maturity. A well-differentiated product differs from competitors' analogues due to its characteristics, quality or more benefits for the buyer. It is important not to try to single it out by working on several qualities at once, but to choose one aspect. For example, trying to make a product more functional while maintaining the same price is more likely to result in a much longer payback.

How to manage the VCT?

When creating a product lifecycle management strategy, consider the specifics of each stage. The choice of methods for a particular product largely depends on long-term prospects, expected profits, the degree of competition, and other nuances.

Implementation

At this stage, steps are needed to attract maximum customer attention and carve out your niche. Depending on the specifics of the product or service, the promotion strategy may be:

• aimed at quick profits — important for a hype product, whose popularity rises sharply to a peak and then decreases just as quickly;
• aimed at quickly conquering the market — suitable for new goods and services whose costs are low; the attention of the target audience is won through active advertising in combination with discounts;
• designed for slow market penetration — this option is suitable for a product that is gradually taking over and is suitable for forming long-term relationships with consumers.

An example of implementing strategies for managing the life cycle at the implementation stage

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Development

To extend this stage of the product life cycle, you can take a course in the following areas:

1. Quality improvement. This can be both administrative and technological methods. For example, it is possible to introduce additional control systems, invest in more modern equipment, and order production automation. When it comes to the service sector, digitalization will be a big advantage, which will simplify internal processes and improve the quality of service.
2. Changes in product properties. This could be developing new versions, upgrading old ones, redesigning, and much more. For example, manufacturers can update software to extend the life span of smartphones and mobile gadgets, and they can use new, stronger and brighter packaging for food products.
3. Price optimization measures. These include the launch of additional services, promotions, the introduction of a new bonus system, gifts for first or regular customers.
4. Non-price methods to stimulate demand. This includes a huge range of tools, from gamification in the form of giveaways or quests to publishing useful content (for example, instructions or life hacks that can be useful when using the product).

Many companies use several methods at once. This is especially important if the product or service has recently appeared on the market, and a businessman needs to understand which tools should be focused on for greater demand.

It's important! At the same stage, you can cover new niches, expand sales, and start exploring international markets, for example, through export or franchising. This is important mainly for a product with a high sales volume: working in this area involves additional costs, which is unprofitable if the entrepreneur has not yet reached the expected level of profit.

Maturity

At the stage when sales have reached a peak, the main task in managing the VCT is to continue attracting new customers and not losing existing customers. The strategy should be differentiated according to these two objectives.

The main measures to extend the gastrointestinal tract at maturity

In addition, at the maturity stage, it is important to pay special attention to the competitive position of a product, to understand how often customers choose it over products from other companies. This data is needed not only to understand the strengths that should be focused on, but also to track the point of reduction in demand in time.

Sales promotion

At the maturity stage, it is necessary to use methods that stimulate the purchase of goods or services. In addition to discounts, expanding the range and personalizing commercial offers, the life cycle at this stage may be affected by:

• Up-Sell technology — advertising and promotion focuses on more expensive versions with an expanded range of functions and better characteristics;
• Down-Sell method — the buyer is offered a more affordable version;
• Cross-Sell strategy — selling goods used in conjunction with the main one.

Up-Sell and Cross-Sell techniques help increase revenue and the average check, while Down-Sell's goal is to reduce the rejection rate.

An example of the use of sales promotion methods

It's important! When choosing sales promotion methods, you need a painstaking analysis of the target audience and prompt feedback from customers. The use of these tools should not be thoughtless, otherwise there is a risk that the buyer will decide that they are trying to put pressure on him and go to competitors.

Decline

When the popularity of a product or service begins to fall, you need to analyze its position and assess its prospects. The main questions that an entrepreneur must answer are:

1. What exactly caused the decline — a natural decrease in customer interest or mistakes in the marketing strategy?
2. What measures will help revive demand at this stage?
3. How much money will it take to implement these measures?
4. How long will it be possible to increase the product life cycle using the selected methods?

If the downturn is caused, for example, by the product's severe obsolescence, and upgrading it requires relatively low costs, the VCT can be increased. For this purpose, measures such as a radical update of properties and functions, restyling, and the maximum possible price reduction are used. If the analysis shows that modernization will require serious expenses, and popularity will increase for a short time, the product is withdrawn from the market. Already released goods are usually sold at big discounts, launching promotions like liquidating leftovers.

Optimization of VCT management

To achieve this goal, businesses are introducing PLM, a set of programs for automating all stages of the product life cycle. The concept itself involves combining several systems, including:

• PDM — storage, processing and monitoring of data about the product itself (technical documents, drawings, models, etc.) );
• ERP — managing the company's resources, resolving sales, planning, and personnel issues;
• MES — software solutions for optimizing production and implementing dispatching services;
• EDMS — optimization of document flow, simplification of internal processes;
• CAD — creating and processing engineering data.

The PLM system helps to get rid of costs as much as possible, reduce costs, and increase production productivity. Its implementation also simplifies interaction between departments and branches, which means that it speeds up the process of entering the market for finished goods. On average, it is possible to achieve the following results:

• reducing planning time by up to 50%;
• reducing budgets by 20%;
• cost reduction by 15%;
• speeding up documentation processing by 30%.

With the help of the PLM system, you can quickly monitor the smallest changes at all stages of product development, take timely measures to expand the market, stimulate demand, withdraw goods from circulation, etc. Seamless integration with other systems ensures the fastest possible data exchange.

Frequent mistakes

Although more and more attention is being paid to the management of the VCT, many entrepreneurs and companies make mistakes at various stages. This, in turn, has a negative impact on payback, sales and other aspects of the business.

Mistakes and their consequences

To reduce the risk of such errors, maximum attention should be paid to the proper implementation of tools and techniques for managing the life cycle of goods before production begins. Modern IT solutions will help a businessman to always be aware of the stage of development of the promoted product, whether it is winning over competitors or, on the contrary, lagging behind them.

What's the result?

VCT management is a whole range of measures and tools that help you get the most out of selling a product. When a product or service gains popularity, these methods allow you to retain the interest of old customers for as long as possible and attract new ones. If practice shows that in a long-term strategy, revenue will decrease, well-structured management will save the company from unnecessary costs when sales decline.

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