The Tribe Discovers the Product Life Cycle
“The excitement of the big waves and the beauty of the sea are undercut by how darn crowded it is out there!” Org exclaimed. “The same amount of boogie-boarders are jockeying for a place in significantly less ocean. If you don’t have one of the best spots, you might as well dry off.”
“You just described a mature market,” Lucy said. “Great profits are possible if you control a significant portion of market share. Competition becomes cutthroat and pricing pressures become reality. Unless you’re an industry leader, you should consider a market exit strategy.”
“Following high tide, the waves inevitably decline and the tide comes in,” she added.
“Actually, low tide is sometimes my favorite time to boogie-board,” Org said. “Since the ‘amateur’ boogie-boarders have left, low tide can be a very peaceful setting. Even when the water becomes too shallow for boarding, I improvise by collecting shells on the beach.”
“The declining market, too, can provide an unexpected boon for those who stick it out,” Lucy pointed out. “The key to surviving in a declining market is diversification. In this case, Org moves into shell collecting, which is a much more fertile market.”
“Sounds like our traditional Fire products are in a declining market,” Numo said.
Lucy nodded. “Cost-management, marketing and advertising activities will be crucial over the next few months to keep these products from becoming unprofitable. Of course, diversification into new product categories is vitally important as well.”
Numo scratched his chin with a bony finger. “The challenge for us is to create a series of waves,” he observed.
“What do you mean?” Lucy asked.
“He’s right!” Org jumped in enthusiastically. “Having a series of products in different parts of the PLC will allow us to capture today’s revenue while keeping enough growth opportunities open in other areas to provide for FEI’s future.”