The Tribe Discovers the Product Life Cycle
“Excellent!” Lucy immediately visualized a model. “We’ll call it the FEI Product Development Strategy Wave.”
“What’s standing in the way of us developing a new product today?” Org asked.
“We don’t know yet,” Lucy answered. “A SWOT (strengths, weaknesses, opportunities and threats) analysis will be necessary to form a more detailed profile of our business. With this knowledge, we’ll also discover the challenges and opportunities inherent in any new product development effort.”
“Let’s do it,” Org said, sounding a bit like Dirty Harry.
Today’s FIRE! Point
At some point, all successful products travel through each of the four stages of the “Product Life Cycle.” The four stages are: emerging, growth, maturity and decline. Although emerging products have a low probability of success, the opportunity to capture a significant share of emerging market makes it worth the risk. Growth stage products are characterized by rapid sales growth and healthy profitability. In a mature marketplace, market share is everything and competition is fierce. Declining industries often feature fragmented competition (i.e. lots of players and few companies with a dominant market share) and low margins.
Financial excellence is paramount to success. When competing in a declining product category, consider industry consolidation strategies in which business growth is fueled through planned acquisition and merger activities.
FIRE! in Action
With its core products in decline, Dupont diversifies
Dupont’s revenue stream in the Brazil and China markets has been growing at 15 percent the last few years. The textile giant http://www.money.cnn.com/2010/04/14/news/companies/kullman_dupont.fortune/index.htm" fills a market niche by providing armor-shields for vehicles in these high murder- rate countries.
Next week: the FEI tribe plumbs the strengths, weaknesses, opportunities and threats faced by their business via a SWOT analysis.