How Can Shorter Product Life Cycles Be an Obstacle?

The product life cycle describes the typical progression a product makes from initial introduction to growth, maturity and decline stages. While cycle times vary greatly by industry and product type, manufacturers and resellers in high-tech and rapidly-evolving industries face a number of distinct challenges.

A shorter product life cycle presents a relatively narrow window of opportunity for product manufacturers and sellers to profit. This obstacle relates to front-end planning, production and actual sales during the product's life. In planning, you have to design and develop a product efficiently to meet deadlines aligned with expected customer demand. If you miss the mark, you may miss out on much of the core time to sell. The simple fact that a life cycle is narrow, often three to six months in technology, also minimizes your total potential sales opportunities.

Shorter life cycles make forecasting much more difficult for both manufacturers and resellers. When demand for a product is heavily concentrated in a short timeframe, you typically need to make or hold more inventory to accommodate buyers. If you run out of stock, you could miss significant sales opportunities. If you overestimate demand, you'll likely end up with a large supply of remaining inventory as the life cycle closes.

If you make a mistake in some aspect of product development, merchandising, distribution or pricing for a product with a longer life cycle, you often have room to adjust. With a short life cycle, missing the mark on any key business step signals failure. You simply don't have much time to adjust on the fly. This reality is especially concerning for product makers. If you spend months to develop a product that isn't well-received initially, you likely won't have time to fix it and relaunch before the cycle ends.

Competition can exist in markets regardless of the life cycle period. However, shorter life cycles combined with intense competition create significant challenges in marketing and promotion. Companies may need to escalate the level of promotion before the product launch and during the life cycle. In some cases, companies have to use aggressive discounts early and in decline to attract initial attention and to clear out excess inventory. Steep discounts can offset any profit earned on sales at regular prices.