A popular and instrumental industrial process for the past three decades, product life-cycle management (PLM) has brought continuity and surging revenues to more than a few sluggish industries.
This major breakthrough was initiated in 1985 by American Motors Corporation, which sought to ramp up its production in order to throw their hat in the ring with larger competitors. And so they did, by introducing the first true sport utility vehicle — the Jeep Cherokee XJ (later known as the Jeep Grand Cherokee).
The initial PLM process utilized computer-aided design (CAD) to raise productivity levels for AMC’s engineers. The concept of product data management was then added, allowing more rapid conflict resolution to decrease the number of costly changes required.
Marketplace success led Chrysler to purchase AMC and adopt PLM techniques — breaking records to become the lowest-cost producer (by half) in the auto industry in the mid-1990s.
PLM eventually came to encompass a product’s entire life-cycle — from inception, design, and manufacturing to service and end-of-life disposal. The combination of people, processes, data, and systems creates the foundation from which a firm can extend their enterprise. As AMC quickly learned, PLM was more than just a new technology — it was an innovative business strategy.
Equally important to the technical aspects of the PLM process is a specialized form of marketing that integrates the customer with the manufacturer throughout the product’s life-cycle.
Without adapting sales techniques and product changes to fit customers’ needs — and incorporating their feedback at all stages — the best of intentions can fall flat (along with your ROI).
Product Life-Cycle Marketing for Each PLM Stage
While product life-cycle management deals with the aspects of product engineering and design, product life-cycle marketing is equally important as it involves managing the product’s value and adapting to public demand at each stage. The limited life of a product isn’t something that can ordinarily be changed, which is why marketing, customized to the life-cycle, is imperative.
The four stages of a product’s life-cycle — introduction, growth, maturity, and decline — each bring with them a different set of challenges; all require unique produce life-cycle marketing strategies to ensure maximum sales and profits.
The initial life-cycle stage includes startup financing, research and development, manufacturing, and consumer validation. It is the most challenging because you are dealing with a brand new market, generally with little to no demand. Costs are high for research and product testing, not to mention the launch of a product.
If there are competitors in the market, your marketing team will have to be equipped with foresight and endurance.
On the other hand, if your product is original and fills a gap in the market, the lack of competitors will give you a distinct marketing advantage. Your brand name may even have the chance right out-of-the-gate to come to represent an entire market, such as with Microsoft or Apple.
Design validation is critical to this stage and consists of testing your product prototype with a small but targeted group of consumers who would be inclined to use your product. Making certain you have something viable with a path to profitability is, of course, a mandatory element of PLM, as well as product life-cycle marketing. The input from potential buyers can help dictate marketing strategy and pricing right from the onset.
Your product life-cycle marketing strategy during the introduction stage should focus on building demand for your product so that you can establish its market. Product promotion will be the primary emphasis.
During this phase, the most cost-effective and streamlined distribution channels must be developed to make sure you can get the product to market as the orders roll in. If any supply issues do crop up, marketing can help managed any image issues.
The growth stage begins once the product’s position in the market has been firmly established and is when the greatest profit can be realized.
If managed successfully, the introductory phase should have enabled a self-funding growth stage. Economy of scale will have reduced both fixed cost per unit and variable costs savings can be achieved through efficiency of operations.
At this stage, therefore, sales revenues should generate ample profit margins — allowing your company to invest more money in promotional strategies to maximize the potential of this phase.
At this juncture, product life-cycle marketing needs to ramp up its promotional activity and take advantage of production savings to offer consumers special pricing and introduce them to brand extensions. This, in turn, will help to solidify customer loyalty and lengthen a product’s growth stage and consequently its overall life-cycle.
Marketing representatives can also work to build layers of trust by openly communicating with customers at this stage.
And, it isn’t just what they say — it is where they distribute that content. Knowing where buyers look for information and interacting with them via the channels they frequent (e.g., forums, websites, social media) is critical. Buyers are more apt to engage with content they can relate to and that pertains to their preferences.
The gist of the maturity stage is that you must strive to keep the edge in the industrial niche you have developed. You cannot assume everyone will tag along forever; you’ve got to stay abreast of technological advances and changes in customer demand — all while remaining credible.
As you work to maintain your share of sales in a larger pond, you may find the market has become increasingly saturated — basically because you’ve already garnered the bulk of customers you’re capable of attracting.
At this point, product life-cycle marketing should take a more targeted approach because sales have usually peaked and profits are slowing proportionally.
Product differentiation will also become more and more crucial during the maturity stage and modifications that improve your product or its manufacturing process might give you a marketing advantage over competitors, either in terms of price or functionality. Think about adding new features that will stimulate the imagination of your customer, allowing them to use the product in a new way that works with their current lifestyle.
Likewise, make use of the latest innovations in marketing media to develop your campaigns as you seek new audiences for your product and try to engage existing customers. The use of trending methods of communication is crucial to remaining in touch with your buyers.
This stage is one in which your marketing partner can be the most creative. If you empower them and listen closely, they will bring to the table a myriad of ways to heighten the appeal of your product. Channeling your customer’s desires and intentions is the magic of marketers and, when given some latitude, they tend to break through the ceiling of anything close to average results.
Not something a manufacturer looks forward to by any means, the stage of decline is inevitable and inherent in PLM. The natural shrinking of your market share (due to saturation, primarily) is unavoidable.
That said, by reducing production costs even further and looking into cheaper markets with less disposable income, you can still acquire new customers at this stage.
There are also lifelines you can grab onto in order to draw this stage out as long as possible. If you have focused on effective product life-cycle management, and made the most of all product life-cycle marketing avenues, your existing customers may surprise you, choosing your solid and reliable product over “the next best thing.”
So as long as you take care of them and keep your image polished, chances are that they’ll stick with you for as long as possible.
Be prepared, though, for when it is time to pull out of the market so that you don’t sink money into supporting a product with declining sales.
If you’re left with large amounts of inventory, there are companies who will absorb your discontinued products at a decent bulk price and resell them at significant discounts to appreciative consumers — giving your brand further recognition.
But when it’s finally time to discontinue your product, take the high road. Give your customers ample notice so they can resolve maintenance or repair issues. Offer helplines or forums and online manuals to retain the integrity of your company name.
Even if you’re shutting down an entire enterprise, don’t be deterred from taking these steps — you never know when you’ll be “out there” again with another innovative product!