Decline Stage of the Product Life Cycle – How to Handle It 

The decline stage... Has a shiver crawled up your spine yet? No matter how good your product is, it obeys the rules of the product life cycle. As the preferences of people are constantly changing, and more advanced offers regularly replenish the market, the concluding inevitable stage of any existing service is the decline stage of the product life cycle.


Still, it is not a reason to give up. Companies that can determine this phase in time and view it as an opportunity rather than the climax of their business, can work it out and prolong the life of their product.


As a design agency, Eleken had a chance to work on projects at various stages of their lifespan – product redesign isn't all you can do to extend a product's shelf-life (somehow redesign comes up first when things aren't going well anymore). Taking the right steps to expand product longevity is a complex task that requires smart strategies for each stage. We are going to dive into this topic with you and help you to learn more about the decline stage. But first, let's remind ourselves what the product life cycle is.

What's the product life cycle again?

The product life cycle is a series of stages that products undergo from introduction to growth to maturity and eventual demise. The lifespan is different for each product. It can take a week or a month for one item, like some trendy necklace, and years or even decades for another. Warburtons, for example, has been existing since 1876.


There are four main stages in the product lifespan.


The initial stage of the cycle is the launching stage. The product has just been introduced to the market, the growth in sales isn't significant as it takes time for people to test it. The competitors are not so fierce yet. It gives the company many chances to set a monopoly.


When defining the growth stage it is marked by higher profits and wider recognition. Customers spot you among other manufacturers and the demand rises. Entrepreneurs introduce some adjustments or additional features.


The longest of the stages the company pass-through is maturity. The sales rise to the highest point in their life cycle and the pace of progress slows down. The competition is extremely aggressive. The need to keep up with the competitors motivates entrepreneurs to update product characteristics and roll out advancements.


The last stage is the decline. The competition gets too high,  the sales go down because of the latest technological inventions, changes in consumer needs, and the upcoming trends. The sales rate falls until it stops being cost-effective for us to run the project. Nevertheless, there is still money to be made if you can handle it correctly.


To prepare yourself for this stage you should learn to recognize the factors that warn you about the approaching decline.


Read more about the product life cycle phases.

The main features of the decline stage

product life cycle curve
Image credit: knowledge.panxpan.com


The curve of the product life cycle distinctly displays the most significant indicator of the decline phase: the downturn in sales. That’s the reason for the great discounts, sales, and general price cutting.


There is a noticeable decrease in income. The demand falls off as the competing products oversaturate the market. The competition increases, becomes unbearable and customers find more attractive competitors.


At earlier stages, spending money on advertising yielded benefits and was cost-effective. Financing tons of ad campaigns in the decline period leads to lower profits and even losses. The product you produce seems to become unprofitable anymore.


However, it never disappears completely from the market. There is always some residual demand. Do you remember flip phones? (yes, some people still use it). Not so long ago the flip phone was at its peak of popularity. Now, this type of mobile is in the decline. There are still some of them available up for sale. People buy it as a rarity or for their grannies. It's called residual demand. The same fate befell CDs, iPods, public payphones, physical newspapers, etc.


You have to know the reasons for the possible devaluation of their service to be ready to prevent a shrinking product life cycle.

Decline: why it arises

The market is a complex system with many aspects that affect the success or failure of the project. The causes for the decline include both external and internal factors. The basic reasons are:


  • The product. The company’s favorable position on the market depends on the product itself. The sales go up if the thing you produce meets the needs of consumers and has a fair price. If the cost is not reasonable, or people simply don’t need this item or service you move into the decline phase.


  • Competition. Demand creates supply. If your project is successful, sooner or later other entrepreneurs will use its benefits and release a similar proposition. To keep up with the competitors you have to adjust to dynamic trends and regularly present beneficial updates to the audience. Otherwise, you can go into recession. For instance, MySpace, probably the largest social network at the beginning of the 21st century. It was founded in 2003, unfortunately, it failed to compete with Facebook and gradually fell into a cycle of decline.


  • Technological advance. Every day technological progress makes dozens of items obsolete, they start experiencing declines in sales of a product. In case your product falls behind other offers on the market people stop buying it. It happened with Fax machines, record stores, paid personal email accounts, and many others.


  • Financing. Modernization plus ad campaigns contribute to business prosperity and demand solid financing. If you can’t provide the project with enough money for constant improvement, you may start experiencing a downturn in sales.


  • Legal issue. The amendment in the law system can lead products in decline, even in case they were successful previously in the cycle. Potassium bromate, known as a baking powder, that helps the bread stay soft longer is harmful to your health. It can cause problems with digestion and that’s why potassium bromate was forbidden in the set of countries. That's how the legislative ban moves the product into decline.


  • Economic issue. A sudden financial crisis may become another reason for a decline. An average person simply can’t afford to buy luxury cars or subscribe to expensive services during the crisis. People cut costs and buy only essentials, while some companies become declining.


The above information can help you to foresee and try to prevent a recession in your project in the earlier stages. In the next section, we are going to tell you about the actions you can take during the decline period.

Decline stage strategies

A significant fall in income marks the beginning of the decline phase.  Making a profit during this period is challenging, but it's not all lost yet. Proper analysis of the market and your target audience prompts picking an appropriate variant among product revival strategies.


Here are several scenarios to prolong the life of your product:

Changing the direction

At the time consumers stop buying your product you can consider changing the direction. It means exploring possibilities and observe an alternative appliance for your solution.


Some businesses can modify their product and present it to other market segments. Such actions bring a new audience to your business. For example, those who couldn’t afford using your service previously, or those who simply didn’t notice you among the wide range of other offers. This way, you can start selling in a completely different industry and find a new niche.


Believe it or not, back in the 2000s Google was considered an unprofitable company. They used to offer search appliances to different industries and sell their search technology to other search engines. Only after launching its AdWords, online advertising service, in 2003 they gained popularity and managed to produce 21 billion dollars by 2008.


One more example of a successful outcome from a recession is PayPal, an online payment service. In the beginning, it was a cryptography company. Only after making its thorny way full of errors, attempts, user fraud it managed to establish itself as a worldwide known payment system.


Generally, changing the way people perceive your brand can give it a new life.

Milking the product

Looking for a new target audience for a product struggling with the downturn can be difficult, but there is another way to extend the longevity and lead the product to profits.


Milking the product means you don’t spend money on it. You cut costs and continue selling until it brings some revenue, but without investments.


This strategy includes lowering the price. This way some products that have entered the decline stage can return the leap in conversions for some period without changing anything in their product. In this situation, there is no use in spending too much on advertising because the demand for the item you produce is still low. You can’t raise it by creating awareness.


Lowering the price gives you additional time and money. As soon as the fee is at the lowest beneficial point you go back to the Maturity phase strategies or you can start a new project.


An example here would be Apple's iPod. Technological advances made this device obsolete. Smartphones with big screens, simple access to the web, and an inbuilt music player left no chance for an iPod. Therefore the popularity of iPods began to fall. Apple showed the world its first iPhone in 2007, while the last iPod appeared in 2006.


One more way to minimize the expense is by launching an alternative technique of production or by moving the office to a cheaper place.


Taking all the advantages of the product is effective if you are preparing to present your next project and it requires extra time and money. Still, as soon as it's not economically viable to continue selling you move to the next strategy.

Leaving the market

If all your efforts are in vain and the product becomes completely unprofitable the right choice is to discontinue it from the market.


On this condition, you have got can sell the product to someone who sees some value in it or just close it down.


We’ve already mentioned MySpace in this article, but it wasn’t the whole story. The well-known social network failed as it couldn't keep up with Facebook. Besides, it was affected by the financial crisis in 2009. In 2011 the social media was sold for $35 million. Justin Timberlake became a principal shareholder, he literally raised MySpace from the dead. He transformed it into a music social media site. Now, being once in recession, MySpace has chances to move forward.


Choosing the right decline strategy opens new opportunities for your future projects and ideas.

Conclusion

The decline is a challenging period still it allows finding an alternative way of usage for the product or present a completely new thing on the market. Note, the last stage does not stand for the demise of your business in general. It is only the termination of one particle in a large structure. To make each project you launch successful and prevent the downturn, you have to be aware of effective product lifecycle management.

Read more about product life cycle strategies.

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