Dear Strategy: 038 Non-Revenue Generating Products Revisited

February 22, 2018

Dear Strategy:

“How do you think of product strategy when your products are non-revenue generating and at all different states of maturity?”

 

For this one, I’m going to take you all the way back to Episode 2, which you can access by clicking here. That question was focused on developing a business case for a non-revenue generating product. This week’s question is something of an evolution to that episode, because here we will be talking about putting together a strategy for those non-revenue generating products – particularly with respect to where they are on the post-launch lifecycle curve.

 

Managing your portfolio with respect to where it is in its product lifecycle is also something we’ve covered in a previous episode – Episode 16, to be exact – which you can access by clicking here.  What we didn’t talk about in that episode, however, is how to determine what stage of its lifecycle your product is in.

 

If you do a quick Google search on “product lifecycle curve,” you’ll see that most of the depicted lifecycle charts are measured by time on the x-axis and sales or revenue on the y-axis. But what happens when your product isn’t revenue generating? Well, this is where I have to respectfully disagree with much of what pops up online with respect to this subject.

 

In my experience, determining whether a product is in the growth, maturity, or decline stage of its life isn’t quite as straightforward as looking at its revenue, or even its sales volume. Let’s say that you have a product that’s been in the market for the last 20 years. Let’s also say that product is based on an old and outdated technology. Finally, let’s say that product has brought in an increasing amount of revenue and volume each year that it’s been in the market. Would you consider this product to still be in its growth phase? Not likely. Maybe the increased revenue is due to inflation or an ever-expanding market. But if you continually treated it like a growth product, you would likely miss the fact that it is, in fact, in its maturity stage and, worse, you might not be ready with another technology to replace that product once it starts dropping off into decline.

 

The fact is, there are a number of different factors that should be used to determine where a product is in its lifecycle. To name a few: revenue, volume, profit, market share, customer acceptance, technology, industry trends – the list goes on and on. Needless to say, this is nowhere near an accurate science. But, then again, that’s the beauty of lifecycle management – it’s something that you “feel” more than determine with any level of pinpoint accuracy.

 

And that’s good news for a non-revenue generating product – because you have a lot of factors to choose from when determining what stage of its product life it may be in.

 

Now, once you’ve determined your lifecycle state, then you have to do something with that information. And that’s all about having a strategy that matches your lifecycle state, and helps you plan and balance your overall portfolio so that it continues to grow (or helps the rest of your company grow).

 

And that applies to just about any type of product you’re managing – whether its revenue generating or not.

 

Listen to the podcast episode
Dear Strategy: Episode 038

 

###

 

Bob Caporale is the author of Creative Strategy Generation and the host of the Dear Strategy podcast. You can learn more about his work by visiting bobcaporale.com.

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Copyright 2019 Strategy Generation Company LLC

Send this to a friend