No matter what it is that you sell or how well it’s going now, every product has a life cycle that begins when it’s introduced into the market and ends when it is eventually discontinued.  It’s essential that you know where each of your products is positioned in its life cycle, and that you use this information to plan the future product strategy of your business.

A firm with too many products nearing the end of their life cycle has a serious problem.   Businesses need to conduct regular reviews of their existing products to identify those nearing the end of their life cycle in sufficient time to plan and develop their replacements.

Decreasing sales volumes are one indication of a product that may be approaching the end of its life cycle. Falling profitability is another sign to watch out for. Your accountant can conduct a product by product profitability review that will show clearly which products are selling at sufficient volume with a healthy margin of profit, and which products are in decline and being carried by the more profitable ones.

Not long ago CD players and cellular phones were emerging products. Now they’re so common in most parts of the world they’ve become almost commoditized, selling largely on price.  So now, at this new stage in their life cycle, differentiation by enhanced features is essential to keep manufacturers in business. In the future they will no doubt be replaced by a newer technology altogether.

Freshen up your offerings

An aging product range is a drain on resources and can make your business appear dated. Examine your present range of products to identify any that are at the end of their life cycle and should be deleted to make way for emerging products.

Emerging products are good for the image of your business. They demonstrate to present customers that you’re working to give them something new and better. They also show potential customers that you’re innovative and your products are worth looking at.

Emerging products can add excitement to your business and to the other products in your range. They don’t have to be totally new and can even be derived from existing products to save on development costs. The most important thing is that they are seen as ‘new’ by customers.

Look around for good ideas

There are several places you can look for ideas about new products you can profitably introduce:

•           Talk with your customers and ask them to recommend new products that will improve your range.  This is also a good time to ask for their opinions on which of your products have reached the end of their life cycles.
•           Examine your competitors’ offerings and consider introducing products similar to those that are proving successful for them.
•           Review trade journals and industry websites for ideas. Good ideas for new products will often come from other countries and can be discovered in the content of editorials in trade publications.
•           Ask potential customers for their comments, including whether they’d change suppliers and buy from you if the new products were in your range. 
•           Talk with members of your own team. It’s surprising how many times successful ideas for new products have originated from personnel within a firm.

Test and research

When you identify a product you believe you could successfully introduce, prepare a marketing plan for it and calculate its potential contribution to your profits. Especially critical in these calculations are product development costs and pricing.

If an emerging product is intended to replace an existing one, try a calculation based on the sales levels of the product it replaces. Don’t assume that sales of the emerging product will automatically be higher; new products often take time to become established.

You might be replacing an old product that has become unprofitable but still retains a high degree of consumer loyalty. In this case your marketing plan needs to incorporate a direct approach to existing customers that will encourage them to switch to the ‘new and improved’ offering.

Manufacturers of men’s razors are experts in this technique. When a new razor cartridge is introduced the old product remains on the supermarket shelves but the handles are dropped from the range. Eventually the old razor handle fails, forcing a purchase of the latest model handle/razor combination.

If possible carry out a trial in a limited test market to judge customer response. This is especially useful for retailers adding a new product to their range.

The ideal product portfolio incorporates a balance of products at various stages of their life cycle; some emerging, some middle-aged and some mature (but not yet in a state of decline). Mature products need to be closely monitored so they can be phased out before they require excessive marketing support and become unprofitable.

You offer your customers and potential customers more than just a product. What you’re really offering is a value proposition – the sum total of the product, its benefits, its price and the services you provide that go with it.

Your value proposition will vary from one customer segment to another. It’s important to define the value proposition for each segment in your customer base before you begin your marketing.

What is a customer really looking for?

Remember that customers buy for their own reasons – usually to acquire a solution to a need. If you can segment your customers into groups that share the same reasons for buying, you will be able to communicate the right value proposition to each group and maximize your sales.

Very few products appeal to onl one segment of the total market. Computers are a good example. They’re used by businesses for commercial purposes and by young people for ‘chatting’, playing games and downloading music.

If you’re selling PCs, your value proposition for business customers will be entirely different from the value proposition for teenagers, although the product is the same.  To optimize your marketing you would target these segments separately with an appropriate value proposition for each segment.

Promote your value proposition

Develop a detailed profile for each segment in your customer base. Then you can create a value proposition that appeals to each because it represents a solution to their particular needs.

When defining a customer segment identify all the important details. Gender, age, lifestyle, frequency of product usage, preferred media and geographic location are just some of the factors you need to identify before you can begin your marketing work.

Going back to our previous example of PCs where we segmented business customers from teenagers, there are a number of ways to use this kind of detailed information. A PC package for businesses could include software designed for commercial purposes, would be advertised in the financial press, and could include in-office installation.

Teenagers on the other hand would be more likely to respond to bonus games software, ads in youth-oriented publications or websites, and high-quality sound and graphics.

Market to the most profitable segments

If you analyze a product and find it sells to five identifiable customer segments, does that mean you need to promote to all five segments? Not necessarily. It does mean you need to identify your most important segments and direct your marketing expenditures accordingly.

If your business is like most SMEs it will follow the 80/20 rule – 80% of your profits will come from 20% of your customers.  Focus on that 20% and you’ve just done 80% of your marketing.

That doesn’t mean that there will always be only one customer segment represented in your top 20%.  What it does mean is that you should identify the most profitable segments and concentrate on them.

Note that you’re looking for 80% of the profits, not 80% of the sales income. Chasing sales volumes without regard to profitability is a trap that can lead to price being the only differentiator between you and your competitors.

Remember, the ideal value proposition is a statement of customer benefits rather than product features - if you’re selling hand lotion to women in the 40-60 years of age bracket and  who spend a lot of time outdoors, your value proposition is beautiful hands that don’t show the effects of weather and aging.  If you also know the magazines she likes to read, then you know both how, and where, to reach her.

When small businesses begin to grow, managers invariably find that they have an increasingly time consuming administrative workload. At this point they may add new members to the team to perform duties that they previously handled themselves.

But this situation also gives you the opportunity to delegate some of your decision making to others as well.  Delegating some of the decision making gives you more time to focus on growing your business, and team members more opportunity to grow in their jobs.

Analyze and cost what you do

Begin by analyzing the work you do. Most business owners don’t realize how much time they spend doing work that could be more effectively performed by others – work that is not really related to the critical functions of the business.

Once you identify the work you are doing that could be done by someone else, list the decisions that these tasks require. These could be decisions about duties as simple as ordering office stationery or handling the petty cash.

Now calculate the authority level needed for each task. If the usual stationery order is $150 a month, then you have to give the person handling the ordering the authority to commit $150 on behalf of your business. Then identify a team member you believe is ready for handling this duty and delegate it!

Developing trust and maintaining security

Delegation requires trust. Many owners have a hard time letting go of responsibilities because they aren’t certain they can trust anyone else to do the work they’ve been doing themselves. Part of delegating successfully involves ensuring that the person to whom you delegate really is equipped to make the decisions they will need to, and this may require specific training. You need to set in place the reporting mechanisms that will allow you to track how they are going.

You also need to consider security issues, particularly when the firm’s funds are involved. Make an assessment of how much is at risk if something goes wrong. If your petty cash float is $200 that’s the amount you can potentially lose. Don’t create an opportunity for petty theft - trusting someone is much easier if temptation has been removed.

Give it time

It may take time for these new responsibilities to be fulfilled to your complete satisfaction. Make yourself available for consultation and review the effects of decisions that are made until you’re certain you can fully pass on the responsibility for making them and not worry.

Rose Mihaly, of consulting firm Mihaly Associates, sums up delegation’s benefits to owners: “When delegation is a tool for facilitating an employee’s growth while the boss gains time to devote to his or her core competencies, delegation becomes a win-win situation.”

Unless customers perceive something unique about your business or its products they will relegate you to commodity status and make purchase decisions solely on the basis of price.

Discovering and promoting what makes you different, your Unique Core Differentiators (or UCDs), will make your business and your products stand out from the competition.  UCDs are powerful selling tools that can be used in all elements of your marketing. They are key contributors to your image, and they are what your customers and prospective customers relate to you and you alone.

Anyone hearing the business’ name should instantly think of the UCD if you get your marketing right.

Your company’s UCD can be a slogan or a graphic. It can be a customer perception of pricing or value. To make it work for you it has to be both factual and demonstrable – a deliverable to the marketplace. Your business name itself can be a UCD.

What’s in a name?

Take a hypothetical retailer: Bigger Discounts. Their advertising slogan could be ‘The name is what you’ll get when you shop with us’.  The UCD is clearly articulated in the company’s name and slogan, and is intended to be perceived as a reflection of the store’s pricing policy.

This kind of UCD is simple but appeals to a large segment of the market. It says to bargain shoppers ‘shop here and you’ll save more money than if you shop elsewhere’.

What if you’re trying to be an exclusive retailer of luxury goods where customers want quality and aren’t as interested in price as the Bigger Discounts shoppers?  UCDs can be a lot more than just a descriptive name.

Saks Fifth Avenue and Harrods are names that are, in themselves, meaningless but have connotations of wealth and quality going back decades.

The same principle applies to individual products. Scotch Tape and Kleenex Tissues are products whose qualities are known worldwide, and the strength of their branding ensures their success independent of the companies that make them.  (Can you name the makers of these two products?). Both names are unique in the minds of consumers and worth millions of dollars. That’s what’s in a name.

Define your own UCD

Define your own UCD by cataloging all those things that you think make you better than your competitors: your product mix, your standards of service, your guarantee, the specialized knowledge of your team, or even a service such as free home delivery.

Look also at areas where you may not be better than competitors but can promote differently - there’s nothing inherently different about one builder’s concrete from any others, but one successful marketer painted their delivery trucks a shocking pink and gained all the attention they wanted.

If possible, relate your UCD to something that customers need, or relate it to one of their major frustrations. Try and tell them that they can get what they want from you and that they will enjoy the purchase experience more than if they’d gone to one of your competitors.

What you say must have a genuine appeal to your target audience. And can’t be something your competitors could also say. If you don’t have a real point of difference, invent one. Even if it’s only packaging your products in a distinctive wrapping, get away from the herd!

Make it work for you

Integrate your UCD into every part of your marketing. You may not want to change the name of your business but you can certainly adopt a new advertising slogan, graphics style, color scheme, or amend other elements of your business that will remind customers of your core promise and set you apart from the competition.

“An executive is a person who always decides; sometimes he decides correctly, but he always decides.” - John H. Patterson