The Product Life Cycle shows that new products rarely reach their peak quickly. It takes time to grow sales after the launch.
This makes sense when you think that when a product launches, the market will not be aware of it. Strong communication plans will move consumers down the adoption funnel as we outlined in the marketing planning skill guide but this process takes time.
How much time depends on the nature of the new product and the size and scale of the brand behind it.
Bigger companies will have bigger launch budgets and expect faster results.
But in smaller or slower moving categories, it can easily take 6 to 12 months for new product launches to gain impact with consumers.
Commercial mix post launch is key
From a business management point of view, it’s important to understand the commercial mix here.
Sales may be at low level, but a high level of investment in advertising and communication is required in order to move consumers through the adoption curve from awareness and consideration to trial.
Unsurprisingly, profits at this point will be low or even at a loss. It is the role of the project leader and project sponsor to communicate the need for patience and a longer-term view on profitability.
It’s therefore extremely useful to have additional non-financial KPIs in this introduction phase. Look at factors such as awareness and trial rates as these can help predict future success.
In this phase, the growth curve turns up sharply as the popularity of the product grows and consumers become more aware and more confident about the product.
Marketing investment continues to be high in order to solidify the growing scale of the business. Profitability levels will start to rise because of the growing sales helping to bring more scale to the business.
At this point though, competitors will start to take notice of the success of the marketing innovation. Competitive offers become more likely.
The objective at this stage is to maximise the growth and share options. You want to drive growth through more wide-spread adoption.
At some point growth rates will start to slow down as the category / product reaches a point of maturity. This maturity phase accounts for the most people in the market and the product takes on a mainstream status.
This stage can be extremely profitable. The level of investment required to maintain sales can be much smaller as a percentage of total sales than is required to drive growth in earlier phases.
The key challenge here though is that because of the size of the market, competition will likely be high.
Bigger players in the market will look to defend their size. This can often lead to more aggressive price positions.
Bigger players will also look to sustaining innovations to keep this profitable maturity position going as long as possible. They can become fixed on the short-term. This maintenance of sustaining innovations can quickly become threatened by new entrants to the market with disruptive innovations.
At some point, the model argues all products will start to enter a decline phase.
A new product or invention might fill the need better, the market might become so saturated that that there are just fewer new consumers.
Or it can just be that fashion, culture or lifestyle trends have changed.
At this stage, investment will reduce. The business effectively milks as much as it can get from what is left in the category.
These four stages of the Product Life Cycle – Introduction – Growth – Maturity – Decline – can give a useful guide to predict what might happen with your marketing innovation.
It’s helpful to understand what the business model and commercial mix might look like. But bear in mind that marketing is not just about the product, it’s also about the consumers that buy the product.
The Innovation Adoption Curve takes a similar view of how marketing innovations roll out to market but takes a more customer centric view of innovation.