Products designed with the needs and wants of the target market in mind are mostly easier to sell.
Such products also require less investment in marketing.
However, people’s needs and wants change with time and as the needs and wants of the target market change, companies also need to update or replace their product to meet the changing demand patterns and new preferences of their target market.
Developing new products in most cases proves to be expensive.
However, each product has a natural lifecycle. Since developing new products can require a major investment, companies try expanding the lifecycle of a product using extension strategies. They try to keep people interested in the product and sustain their sales level through various strategies.
Not all products have the same lifecycle and while some may last longer in the market, for the others the decline phase might come sooner than expected due to reasons including increased competition, changing demand patterns, lost demand due to weak branding and changed industry environment.
There are several ways that businesses can extend the lifecycle of their existing products instead of developing new ones.
Product Lifecycle Extension Strategies
Differentiation is among the most effective methods to extend the product life cycle of an existing product. One of the leading reasons a product might meet the decline stage sooner than expected is the growing level of competition in the market. When several players enter the market and offer superior features at lower prices, a product may face decline in sales faster.
Differentiation involves making a product stand out compared to the rivals in the market. This is done usually by highlighting the difference between the product and its competitors. It includes highlighting the features and benefits that make a product superior compared to the others in the market.
Marketers must ensure that the product has a unique selling point (USP) which is a good method to differentiate a product from competitors.
A USP or unique selling point is something about a product that makes it more appealing compared to the competitors. For example, a product offers the best quality of all the products in its category or has a unique feature not found in the rival products. Another example of USP is the lowest pricing. A company can sell the product it has made at the lowest price compared to the rival products in the market.
Product differentiation helps increase the attractiveness of the product and get more customers interested in buying the product. This is an effective strategy for attracting more customers and new buyers for an existing product. Many times, it can also help hack into new target markets.
Reducing product prices:
By the time a given product reaches its maturity stage, there are several players that have entered the market with similar offerings sensing the opportunity for making profits.
At this stage, there are several factors that become difficult for a company. For example, it cannot freely experiment with prices or distribution and promotions strategy as in the initial stage.
Several of the competitors also offer similar products at lower prices. With competition growing higher, chances are high that sales will start dropping faster compared to similar products selling at lower prices.
One of the most common strategies companies adopt to increase the product life cycle is dropping the product’s price.
To increase sales, companies might cut their profit margins lower to grow their sales. While it helps maintain brand loyalty, increase sales and thus extend product life cycle, it also helps overcome the competitive pressure.
Rebranding an existing product:
Many times, the only thing marketers need to do in order to increase the product life cycle is to reignite people’s interest in the product.
While good quality products designed according to customers’ needs may enjoy longer life cycles, with time customer interest can still fall in the product, mostly due to increased competition and the availability of a large number of substitutes.
Customers can also be put off by boring packaging and branding.
To regain customers’ interest, companies need to revive the branding and packaging.
Attractive packaging helps attract new customers and convinces old customers to try the same product again.
Repositioning to attract customers:
Several times while the initial positioning strategy works well to give the product a sufficiently long life cycle, marketers need to revisit their positioning strategy time to time. Consumer preferences and demand patterns keep changing making it crucial to revamp the positioning strategy to maintain sales and growth momentum.
Repositioning involves positioning the same product before new target markets or changing its positioning in a manner to change the existing target market’s perception of the product.
With time products may start losing their attraction for the existing customer segments. In such a scenario, it becomes crucial to reposition the product so that it does not lose its charm.
It will help maintain demand and bring additional growth by reaching new target markets or by creating excitement among existing target customers.
Repositioning is a popular extension strategy. However, it is also crucial for the marketers to remain careful since in some cases, it can backfire and yield poor results.
Increased marketing investment and efforts:
Many times, companies can increase sales and extend the product life cycle just through advertising and promotions.
Companies can run new advertising campaigns to increase awareness and create demand.
Creating new promotional strategies and running fresh advertising campaigns can prove helpful at creating higher demand and retaining existing customers.
It can also help improve brand image and overcome the competitive pressure.
It is also the easiest option before the marketers in many cases. Rather than exploring new target segments or improving the product and dropping the prices, growing awareness and popularity through promotions and consumer engagement campaigns can help extend the life cycle of the product.
When the level of competition is higher, and there are many players that offer similar products with matching features at lower prices, companies can increase their investment in marketing campaigns to achieve higher brand recall and maintain brand loyalty.
A few last words:
In this way, you see that there are several strategies that can help companies and marketers extend product life cycle and grow sales. Some of these extension strategies are targeted at maintaining demand and customer loyalty, and others are targeted at growing demand by giving the product a new image and recreating its identity.
Many times, marketers also use more than one of these strategies in combination to beat the competitive pressure.
While improving the product and packaging can be an effective extension strategy, dropping the prices at the same time and running fresh marketing campaigns can help grow market share by encouraging customers to switch from rival brands.
Competition is one of the leading challenges that can cause products to reach the decline stage faster and force companies to employ extension strategies.
The level of competition in most cases is the highest by the time a product reaches the maturity stage. It is a very critical time for firms since they can either let the product reach its decline stage or employ proper extension strategies to extend the product life cycle and maintain sales.
There are several examples in the history where companies reinvented the product to grow its lifecycle and turned it into a market leader in its segment.
Businesses can reinvent their products to prevent the loss of market share and premature demise.
Lego is one of the most shining examples of how products can be reinvented to extend the product life cycle and become a market leader.
At a point in time, Lego’s business had reached a very disappointing phase when the company’s sales and financial performance were steadily declining and the company was facing the threat of takeover by a rival brand.
In 2004, when the company’s sales were declining due to the arrival of more innovative products that were keeping kids absorbed, the company needed to decide to how to reinvent itself to protect its brand from imminent premature death.
At this turn in its history, the company brought its focus back to the core product (Lego bricks) that could drive its long term success.
Its strategy to revamp its core product and brand and get rid of unprofitable product lines helped the company survive the challenge.
It did not just survive the challenge but grew to become one of the market leaders in the toy industry.
In several cases, heavy competition, lack of innovation or poor branding can cause product sales to decline prematurely. Many times some products enjoy a great development and growth stage but are soon beaten by the competition and the the maturity stage does not last long. In most of these cases, companies can reinvent the product or the brand to extend its shelf life.