In most cases, the sales and profit volumes associated with various life cycle positions follow a predictable path. So, understanding which phase of the product or service life cycle your business is in can help you predict revenue growth. And that’s important. Because any time your business is able to forecast its revenue more accurately, you stand to benefit from improved decision making.
Knowing whether your product or service is on its way up or on its way down in terms of profitability not only contributes to the success of your revenue forecasts, it lets you manage your marketing plans, hiring practices, and cash flow more effectively.
After the initial development phase, most products and services follow four defined stages: launch, growth, maturity, and decline. Determining which of these phases your product or service currently occupies can help you refine your marketing approach and ensure you achieve optimal performance. So, let’s take a closer look at the four life cycle stages, and what they might mean for your business.
Revenue growth prediction take-away: While your product or service is active in the market during this stage, sales may be slow to materialize, and your overall profit will probably be negative.
Revenue growth prediction take-away: Your product or service is likely to generate its greatest profits during this phase of its life cycle.
Revenue growth prediction take-away: Sales of your product or service may continue to grow during this stage, but your profit will likely decline.
Revenue growth prediction take-away: Both sales and profits generated by your product or service gradually decline below meaningful levels during this stage.
The main thing to remember about typical product and service life cycles is that they’re extremely fluid. In order to make the most of your current market position – and of where your product or service is eventually headed - your business needs to exhibit that same level of agility.
Keep a close watch on your product or service’s life cycle stages, solicit regular feedback from customers, and monitor overall industry and market conditions. By doing so, you’ll be better positioned to adjust your revenue, marketing, and business strategies accordingly.
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