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.


Gamification For Productivity

“Gamification” has become a buzzword in recent years among the tech crowd, but it has spilled over into other arenas as well. With the pervasiveness of smartphone apps and new websites popping up every day, “gamification” seems to be everywhere. At its simplest, it’s just a way of introducing elements of gaming into other tasks.

There are lots of ways to do this: common elements include earning points, gaining levels, and sometimes earning achievements, badges, or prizes. There’s gamification for working out, buying coffee, listening to music, shopping, recycling, and eating out. While retailers and marketers have been using gamification to their best advantage, gamification can also be used to increase productivity, whether in individuals or in a team.

To encourage general productivity, take a look at HabitRPG, which has a website and an iOS app. At its heart, it’s a to-do app, but “RPG” stands for Role-Playing Game, which HabitRPG uses to incentivize productivity. There are four different elements when you start out using the program: habits, dailies, to-dos, and rewards. Habits are actions that you want to either encourage or avoid, but don’t have a specific frequency. Dailies are tasks that you want to repeat on a regular basis: every day, once a week, etc. To-dos are one-off tasks like on any other to-do app. Rewards are things you can purchase by completing your tasks. You earn a certain amount of gold and a certain amount of experience points for each task. Experience points let you level up and eventually unlock different game elements. Gold allows you to buy rewards. As you level up, the game introduces a market, item drops, pets, armor, and other elements. It’s a fun way to keep all of your productivity items in one place with a dynamic and well thought-out incentive scheme.

If you like the idea of a gamified productivity app but don’t need quite as many features, Carrot is an iOS app with a mean streak. It’s a minimalist to-do app that is very user friendly and unlocks features as you gain points. Be warned, though: Carrot has a personality, and if you don’t complete your tasks, she gets angry. How many points you get and how she talks to you depend on what mood she’s in. Carrot is a quirky app that is probably the most unique of the bunch, and worth checking out if only for its surprises.

EpicWin is another RPG productivity program that gives you points and prizes for your real-world tasks. Here again, you can choose your character and level them up as you go. You can’t yet spend gold on things, but EpicWin is in the process of being developed.

If you’re looking to be more productive with a specific task or process, try SuperBetter. SuperBetter gives you tasks, quests, power-ups, and “bad guys” depending on your specific journey, like exercising more, increasing willpower, stress relief, or improving your relationships. It’s not a productivity app in itself, but improving these aspects of your life can definitely improve the rest of it.

If the area of productivity you’re struggling with is managing your finances, there are programs for that, as well. SaveUp is a program tailored to incentivize saving and making smart financial choices. It gives you credits for the choices you make, and you can cash them in to contests with real prizes, or you can cash them out. SmartyPig is a website that also focuses on saving, though a little less gamified than SaveUp. SmartyPig makes saving automatic, and it also rewards you for meeting your goals.

If you’re not so interested in using apps or websites, gamification doesn’t have to involve technology: you can use game elements on your own. The best way to go about it is to start by identifying the tasks that you have a hard time completing or that you want to incentivize. For each of those tasks, determine a point value. You may also want to assign them different categories. Maybe doing the dishes gets you two blue points, but cleaning the bathroom gets you eight red points.

From there, identify rewards, positive (but not goal-subverting) actions or items, and assign them point values as well. Then, to get your rewards, you first have to do enough tasks to afford them. Don’t stop there. When you’re defining your own system, you can get pretty creative. Find ways to allow you to “level up” or do a boss battle: what really big challenge do you have coming up, or what milestone can you celebrate passing? Give yourself constant ways to progress, and you’ll see yourself finding ways to become more productive while having a little fun on the way.

Choosing a Niche Product to Dropship

Time and time again I recommend that you choose a niche product to dropship from your website or sell on eBay. But how do you choose your niche? The following are brainstorming tips to help you come up with a niche product that can be sold online.

First: Check Your Purchases. Many prospective online entrepreneurs try to think of really out-there products like unicycles or bamboo knitting needles so they can enter a market that isn’t too saturated. This is a good idea in some respects, but one of the most important factors when choosing a product is to choose something that people actually buy online. One way to brainstorm this type of product is to think what you yourself buy online.

In the past month, I’ve bought three second-hand novels written by Mildred Walker, a pair of studded motorcycle boots, a Hebrew-printed t-shirt, tickets to a murder mystery play, a pair of Cubs swim trunks, and a calligraphy set. Not surprisingly, almost all of my purchases represent niche markets. Why is that? Because with the exception of a few broad categories like electronics, most items bought online are niche products. This is because common, general products can easily be purchased at physical locations close to your home. You go online to find unusual items that can’t be bought at the mall.

Second: Check Logistics. Let’s assume that I want to dropship my products, not purchase them wholesale. This means that some of the products I purchased last month are out of the running for my niche inspiration. Used books aren’t generally dropshipped, and neither are theater tickets. Shoes and clothing are usually sold wholesale, but in this case the items that I bought might still be appropriate since they weren’t common apparel and accessories. The studded motorcycle boots might be a good candidate for a dropship niche product for a few reasons: first, they are a product that’s not easily found in local stores. I bought those boots online because after searching the three malls in my area I couldn’t find anything quirky enough to satisfy my Sarah Connor Chronicles obsession.

The studded motorcycle boots are a good pick for another reason: they’re a theme product that I could easily build a whole product line around. With the boots as my central product, I could have a goth/punk/emo website, a motorcycle apparel site, or a studded leather accessories site. Finally, while I might not be able to find this product through a dropship supplier, they are expensive enough that I could possibly use a wholesaler to dropship them. Let’s say my wholesale supplier has a $100 order minimum: if a single pair of studded boots costs $125, I can likely have single pairs shipped directly to my customers even though the supplier is ostensibly a wholesaler.

Stay tune for more tips on choosing a niche to dropship products.