Managing Decline

Page 7 Product Life Cycles Managing The Product During Decline

Decline poses serious challenges to all competitors still remaining in the market. The major strategy employed during decline is harvesting. Expenses are reduced as much as possible to "milk the brand" for all remaining profits. Costs are cut back in virtually all areas of the marketing program including advertising, sales promotion, personal selling and trade support. One of the major causes of product decline is the advent of a new technology. Recall what the introduction of calculators did to slide rules, CDs did to the sales of vinyl records, and color TVs to black and white TVs. Slide rules, vinyl records, and black & white TVs entered their decline stages virtually overnight.

Deletion Strategies for Declining Products

Exhibit 1
Deletion Strategies for
Declining Products

Once a product enters decline, the firm must consider its potential deletion from its product mix. There are multiple deletion strategies firms can employ when anticipating a product's removal from the market (Thumbnail One).

Harvest the Product. Harvesting usually signals the firm's future intentions to drop a brand. Harvesting entails finding ways to cut production and marketing costs to the 'bare bones.' The brand is eliminated from unprofitable distribution channels. All forms of promotion are cut back. Most sales promotion is eliminated and advertising is refocused to provide only a 'reminder' effect -- just to let the consumer know the product is still available. The firm knows that harvesting will effectively hasten the decline of the brand, but any remaining sales will be more profitable.

Discontinue the Product. A firm can simply discontinue the product, just as Kodak did this with its Ultralife batteries and Buick did with the Reatta.

Sell the Product to Another Firm. GE sold its small appliance line to Black and Decker and Bristol Meyers sold its Ipana toothpaste brand to two entrepreneurs from Minneapolis who turned it into a low-overhead "garage-shop" operation. These two men effectively milked the brand for substantial profits for its remaining life.

Considerations Prior to Deletion

Exhibit 2
Considerations
During Decline

Thumbnail Two summarizes some of the major considerations that exist when a product does enter decline and becomes a candidate for deletion. The potential impact of the product's withdrawal on the sales of other products in the firm's mix must be examined. Most companies sell entire lines of products, not single product items. Generally, these products complement one another. If so, yanking one from the market potentially can hurt the sales of the other items. Sometimes it is better to keep the "money loser" on the market just because it leads to higher levels of sales of other products in the firm's mix. Honoring warranties and service contracts, as well as providing replacement parts for existing product owners is a must when products are deleted. The firm may choose to provide parts and essential services itself, or may contract these out to other firms.

Page last modified: February 19, 2001