The majority of U.S. industrial product company CFOs have shared concerns that COVID-19 would impact their businesses negatively. For companies that develop and manufacture products, understanding the product lifecycle and how to work around crises like the COVID-19 pandemic can be effective to help improve the longevity and success of companies.
Market Development Stage
According to the Harvard Business Review (HBR), the first stage of the product lifecycle is market development. This normally happens when a company introduces a new product for sale. There is usually little demand at this point; instead, demand has to be cultivated among consumers.
Factors that impact the rate of introduction include the product’s novelty; how practical it is for consumers’ existing problems; and how the new product impacts the demand of existing products. For example, if there’s a proven cure for a chronic medical condition, the product would have a more effective ability to penetrate the market versus an unproven product – be it a medical device, cell phone, etc.
Market Growth Stage
HBR calls the second stage the market growth stage or takeoff stage. When a product is successful, it enters this stage because demand begins to grow exponentially due to consumers expressing interest in the new product.
From there, competitors looking to leverage the “used apple policy” will produce either knock-offs or improved versions of the new product. Businesses competing in this product category begin standing apart – via their product and/or brand. Ongoing adaptation is fluid and contingent based on what competitors are doing, normally through balancing pricing or optimizing distribution channels.
Market Maturity Stage
This stage sees equilibrium in consumer demand. The best way to understand when this is achieved is when the target demographics are consuming the intended products. Competing companies will focus on standing out in the market by providing niche solutions through customer service, comprehensive warrantees, etc. Producers are maintaining relationships with distribution outlets for in-store product promotion and shelf space; also, more favorable distribution agreements normally occur during this stage.
Market Decline Stage
This stage is evident when consumers fall out of love with an item and stop buying it. As too much capacity for the product floods the market and fewer and fewer producers survive, businesses might propose mergers for survival.
Ways to Extend the Product Lifecycle
While the Covid-19 pandemic has taught everyone how to live and work as safely as possible, it’s also shown that businesses need to be constantly reviewing how they can make their product lifecycles more agile.
One way to extend the product lifecycle for a new product is by creating a positive, memorable first impression. An unfavorable first experience might create negative repercussions beyond what would be normal.
For example, how the product was delivered to the customer can make an impact on the customer’s experience. HBR gives the example of companies that produce home appliances. If a small, independent network of family-run appliance stores can deliver white glove service for customers (going above and beyond to make a lasting, positive first impression, including implementing COVID-19 safe practices), they can make a positive first impression. This will increase the likelihood of customers wanting to share their good experience with others.
However, when it comes to merchandising the product, using a more segmented distribution channel via independent appliance stores will take a lot more effort compared to larger, corporate resellers with turnkey distribution capabilities.
Another way, especially to be mindful of COVID-19 safety precautions, is to remove the chance for miscommunication. When working remotely and using chat and/or video conferencing tools, it is important to document all processes, including sample layouts and designs, to ensure different departments are on the same page.
Staying in communication with existing and potential clients is crucial for product launches – either new or enhanced versions. Looking at the next 90 days ahead, evaluate how each customer’s business is doing – are they fighting for survival or is it nearly business as usual? If a customer is all-hands-on-deck to get cashflow to stay in business, it might not be the right time for deployment. But if the new product or enhancement can increase efficiency, it might be right to contact them ASAP.
While every product lifecycle is unique, taking steps to become more nimble can potentially make the difference between a company surviving or thriving during a crisis.