The Product Lifecycle and When to Develop New Products - Small and Mighty Co.

The Product Lifecycle and When to Develop New Products

While you’re developing your product range, it’s essential to identify where your products are in their lifecycle; in this article Joanne Griffin, founder of Arnold and Bird shares her advice for using the lifecycle to forward plan.

The Product Lifecycle and When to Develop New Products | smallandmighty.co

Products typically follow a lifecycle from time released to revenue generated (£). As you can see in the graph below there is an introductory phase when your sales start. Then a growth phase where you’ll see the rise of your sales before it hits maturity. These two periods are when your product will make the most amount of money and grow in sales year on year (YoY). After this comes the decline where the product will start to drop in sales YoY.

The Product Lifecycle and When to Develop New Products | smallandmighty.co

It’s a good practice to identify where each of your products sits on this graph so you can predict where each of your products is in their lifecycle.

How to do this

Download the sales data on your website and anywhere else you sell. Different products may be at various stages or sell better on different platforms. Begin by comparing each platform as well as all of your sales together. See which products are your best sellers by revenue and units as this may be different.

A good way of working out how well the products are doing is by completing a daily rate of sales calculation. Which means you can identify what products are performing well, regardless of the time they’ve been live.

For example, you may have a bestseller that has made a lot of money for your business, but if that’s over five years then maybe the sales are slowing which means it’s in the decline period.

Work out your daily rate of sale for each product by dividing the total sales between the number of days it’s been live; this will give you an indication of bestsellers that have plateaued or new products that are becoming bestsellers.

For example:

  • Drop earrings have been live for 912 days (2.5 years) and have made £410,000.
  • Calculation = £410,000 / 912
  • The daily rate of sale would be £499.
  • Chandelier earrings have been live for 55 days and have made £41,500.
  • Calculation = £41,50 / 55
  • The daily rate of sale would be £754.

As you can see the chandelier earrings are currently outperforming the drop earrings, even though they haven’t brought in as much money, they are currently making 51% more. You can start to see that the drop earrings are in the maturity or decline phase and the chandelier earrings are in the growth phase.

From this see if you can identify what’s different from the new products that are performing well and apply it to new products. Maybe it’s the style, material, colour or trend?

As you’re going through your sales data ask yourself the following questions:

  • Which products are still in their growth phase?
  • Which products are declining in sales? E.g. are sales going down month on month?
  • Which are the best performing product types? E.g. Stationery, bracelets, earrings
  • Which recipients are the majority of your customers buying for? E.g. Age range, gender, for Mums or Grandparents
  • What are your most popular materials? E.g. Wood, metal, a specific gemstone
  • What’s your bestselling price range?
  • Which products sell well at certain times of the year? Are there times when a product spikes, e.g. Valentine’s day but not Christmas? Graduation in the summer?
  • What’s the most popular gift occasion?
  • What are your most popular colours?
  • If you have a bestseller can you recreate it in new material? E.g. From wood to glass?

Doing this data analysis and working out where each of your products sits in the product lifecycle chart means you can identify when you need to develop new products. So enjoy the process!

Beyond the Blog

And if you need an inspiration boost or you’d like specific product ideas sent to you then do get in touch with Joanne. There are four product development packages available to book now. Pick from a current product review, trend inspiration presentation, new product development ideas or a full-day brainstorming session. Get in touch as Joanne would love to help move your business forward.