It is wise to have some form of product strategy that can predict the estimated life of a product before it will need to be refreshed. Good product will help you improve your products so it is important to spend time on the planning phase to maximise your chances of success, and ultimately profit generation.
Prediction is an art, notoriously difficult and imprecise. However, if businesses don't take the initiative and act pre-emptively, they might be forced into unplanned reactions to competitor or market changes.
At each stage of a product's life cycle, management must also consider revenues from later stages. For example, establishing a clear brand identity at the start may help protect a product from competition in later life cycle stages.
A clear idea of future development opportunities is important, to help extend a product's life and stimulate sales growth as the product matures.
Expand market among current users
New ideas, designs and variations of the original concept, to refresh and revive it and persuade more customers to buy.
New products to new users
Use the brand identity to promote new products, based on derivatives of existing ones - to expand the market and bring in a new tranche of customers.
New uses for existing products
Venture into new markets. For example, if products are made for the domestic household market, is it possible to make variants for industrial use, for gardeners, for vehicle operators, or airlines?
Product planners can assign priorities to tasks, depending on the product life cycle stage, and plan requirements for future expansion, capital needs and marketing campaigns. There should be no need to rapidly come up with new ideas, and scramble to get them to market quickly, wasting both time and capital.
Prediction, although uncertain and seldom accurate, is better than doing nothing at all. In reality, every business decision involves making predictions in some form, whether it is about the economy, the market, or the competition.
If a business can act proactively as part of a strategy, rather than reacting to market events, then it will be better prepared to deal with a downturn - it should already have defensive plans in place.
John Taylor is an author for accountingcpd. To see his courses, click here.