Every product follows a lifecycle. From its introduction to extinction, the product goes through many highs and lows. One of the most challenging stages in the product lifecycle is the decline stage.
There are many changes that take place in the way the product performs during the decline stage. Some of the key features of this stage are:
Customers will stop purchasing the product, in favor of newer ones
There is drastic fall in sales and companies need to reduce sale price to encourage purchase
Profits plummet extremely quickly due to slowdown in sales
Companies are unable to offload their existing inventory
Money gets blocked in non-profitable areas
Product withdrawal from market is a very high possibility
While the decline stage brings with it multiple challenges, not all is lost. There are a few advantages that companies can benefit from when their product is in decline:
Cost of production can be reduced by finding alternative manufacturing options
New, cheaper markets can be tapped, for example – flea markets, gray markets and more
Opportunities for partnerships and acquisitions may present themselves
Selling during decline
A product goes into decline when the market outgrows the need for that product. A competitor’s product may be more attractive to customers. While making sales during decline is challenging, it certainly isn’t impossible. Here are a few strategies that companies can use to close sales during the decline stage of the product lifecycle:
Identify different users and new uses for the product
If your product sales are plummeting, it’s probably because your customers either do not need the product or they do not want it. Finding new target customers for the same product will help you make sales during this challenging time.
Maybe your product was unaffordable to a market segment prior to this. Introducing the product to this segment can help you clear existing stock and avoid losses.
Change product specifications
New product development, while expensive, can give your product the edge it needs to beat the competition. Introduce new features, add product variants, create smaller SKUs – all of these can help you target various groups of customers.
Reduce your channels of advertisements
Advertisements are a drain on the company’s financial resources. While reinforcing the presence of the product is important, it can get extremely expensive. Stop using any advertising channel that is not absolutely necessary. Use a cost-effective channel instead.
Partner with companies who sell complementary or supplementary products
Partner with successful companies who produce complementary or supplementary products. This will help you sell your declining product. It will also reduce inventory and transportation costs for both companies.
If sales don’t improve despite all your efforts, then the best thing you could do is discontinue the production of your product. Doing so will help you keep your losses to a minimum. It will also give you a chance to introduce a new product to the market.