Thursday, September 26, 2013

Talking about product life cycles


Products sales can be demonstrated to evolve through various stages during the life of the product. By plotting a chart with respect to time, sales exhibit a typically slow start, then a period of rapid growth, before slowing, peaking, and declining again. 

The practical problems however in plotting the future of any new product may be far more difficult to achieve than the theory might suggest. For some the timeline may extend over years, for others it may be a matter of months. By the time you have collated sufficient data to detect the onset of maturity, it may already be too late to decide what to do next. There are some household brands that have been around in basically the same form for a century, while a more fashion related product, may be obsolete in weeks. The life cycle curve is generally seen as exhibiting four phases - introductory, growth, maturity and decline. But with so many other factors affecting sales it is often difficult to state with any real certainty when growth changes to maturity and when is the right time to delete the product completely. This produces forecasting challenges throughout all phases. 

Many products have failed due to poor availability at the onset of the growth phase and allowed better-prepared competitors to take up the demand. But over estimating the growth can equally put a lot of stock on the shelves that cannot be moved without radical action such as deep price cuts. Various manufacturing and logistics techniques aim to match product availability to demand, but for a longer lead-time supply routes - if the goods are shipped by the container load from China for example - then commitment to stock may need to be taken well in advance. Marketing actions can help of course make some impact on the product life cycle curve. Product updates and enhancements may give the product a new lease of life, but generally they only delay the onset of maturity – they don’t prevent it. There is a need to start planning the successor product while sales are still buoyant. 

At the peak of a product’s success it is easy to assume that success will be projected forward indefinitely, then find that a competitive move or new technology are set to change the market situation. 

Thursday, September 19, 2013

Are marketing campaigns based on research?


It makes sense not to commit investment to new development or promotion without first understanding the market, what benefits the users are seeking and response to different brands. But few companies actually do this. Some assume they know all about their market. Others may think market research is too expensive, so don’t bother. But to conduct a basic awareness and perceptions study need not be prohibitive and can save expensive misplaced investments in producing an ‘off track’ product, or communicating the wrong message. First define your target market. Where is your product being sold? Then define who will buy, or influence that sale. Produce a list of your target audience and take a random selection to ask for their views. Ask what names ‘come to mind’ unprompted, if your brand is not mentioned then prompt with other brand names to see if they have any recall at all. Further questions can establish perceptions they hold of different manufacturers, issues relating to the type of products currently available and key specification criteria that lead to a purchase decision and the most trusted sources of product information. It is surprising how often a simple telephone survey can produce results that show the awareness and perceptions held about a brand are ‘at odds’ with the company held assumptions . 

Keep the interview short, get straight to the point and also record the anecdotal comments – these are often just as informative. A survey may bring up some really fundamental issues. One example found in testing the market’s response to a new product was that nobody would order it because they had massive delivery problems so the market didn’t trust them. Another company that perceived their image as traditional and were looking to launch a campaign to promote a new style, discovered their long absence in communication with customers had led many to think they had gone out of business. But more typically surveys do confirm much of the company’s own views and can help fine tune the campaign, so marketing spend can be committed selectively where it will realize the greatest benefit.