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Product End-of-life: A Primer
Product End-of-life: A Primer
May 14 2012
There are five stages that usually make up the lifecycle of a product: introduction, growth, maturity, decline, and termination.
During introduction, companies typically focus on the success of the product. Maturity is the stage when their focus is to take advantage of momentum and sell as much as possible. Only during maturity or decline do they start worrying about product end-of-life—which may be too late, as the transition from maturity to decline can happen very quickly (not to mention that there is no clear delimitation between stages, which means that a product can move from maturity to decline in its lifecycle without the manufacturer even noticing). Preparing for a product's end of life should definitely start earlier, but the question is when and how they should approach it.
In order to understand that, let’s take a look at some basic concepts of product end-of-life, as well as the most important challenges that companies face when managing it.
Product End-of-life: Basic Concepts
The first important distinction to make is between the marketing and the engineering/production components of the product lifecycle in general, and the end-of-life in particular. While the marketing and sales lifecycle starts later than engineering (as it does not include the design and concept phase), it also ends sooner, because once it stops being sold, sales and marketing are less concerned about it and let engineering/production planners manage the actual end-of-life (this is especially so for planned obsolescence, which involves products that are designed with a limited useful life).
This leads to concepts such as end-of-sales and end-of service. During the end-of-sales stage, the product is not sold or marketed, and may only be provided to existing customers as part of previous agreements, with support being provided for a limited period of time (i.e., until end-of-service). This strategy varies depending on product type (for example, end-of-sales is different for a computer than for a car) and on overall organizational strategy.
During its decline, attempts to revitalize the product may be made, either through marketing incentives and attempts to find new markets, or by improving it and trying to combine it with other products. Depending on the industry and the market segment, companies might combine some or all of these initiatives, but it can often be more efficient to develop new products than to try and improve existing products.
The end-of-life may occur for various reasons, including the following:
limited or no demand for the product
the costs of competitiveness or profitability are too high
strategic decisions to replace the products are made
the product is made obsolete by new technologies
But no matter why it happens, poorly managed end-of-life can have a negative impact on several areas of the business:
: Unsold inventory will be considered a loss, just like any investment in trying to revitalize the product.
: Retiring a product without properly communicating with customers can have a negative impact on your company's image.
: Your entire supply chain can be disrupted if the end-of-life is not planned in advance and business partners are not actively involved in the process.
How to Prepare for a Product's End-of-life
In order to prepare for a product's end-of-life, you need to be alert to signs that may indicate its decline. A decrease in sales is not always relevant, since it may be purely seasonal, but if you analyze costs and realize that the product stops being profitable, only a strategic decision should stop you from discontinuing it.
Market research is useful to determine what changes in the market (customer behavior, new advances in technology, etc.) may have an impact on the lifecycle of the product. Competitive intelligence can help you understand how your offering compares to that of other companies similar to you. If there are too many competitors offering similar products for lower prices, with little to no quality differentiation, you may want to reconsider your strategy and even retire the product.
In a nutshell, you need to follow the product and its efficiency throughout its lifecycle and use that information to be prepared to retire it. But this can only be efficient as part of an enterprise-wide strategy to manage all products together, also known as product portfolio management. Through this strategy, product management is aligned with the corporate strategy of the company. Some companies focus on innovative products, while others may choose to concentrate their efforts on existing products that are still in high demand or bring high profit margins.
When it comes to business software, various types of tools can be useful, from project and portfolio management (PPM) solutions, to enterprise marketing management (EMM), business intelligence (BI), enterprise resource planning (ERP), product lifecycle management (PLM), etc. Among these options, PLM is the solution that can offer the most help with the end-of-life of the product, because it offers functionality to track the product through all the phases of its life and also integrates with other systems to gather and feed the information on the efficiency of the product.
This blog post is the first in a series of posts that will present research on this topic, which will include a focus on both end users and vendors of PLM, ERP, and other software solutions that can be used to better manage product end-of-life. For now, I would like to know which types of software solutions you are using to manage product end-of-life.
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