When to Put a Product Out to Pasture
One of the most difficult — if not agonizing — decisions a small business owner can make is deciding if the time has finally come to discontinue a particular product, especially a beloved yet poor-selling one. Fortunately, there are times when that decision is practically made for you. Every sensible business plan, after all, includes a thresholds for product revenue and products that earn revenue below the established threshold are swiftly yanked.
The real difficultly, however, comes in evaluating a product’s long-term viability or appropriateness for the business — a chore exponentially more complicated than just crunching numbers to assess how much revenue the product continues — or fails — to generate.
Still, despite the emotional factors that may influence your decision to prolong or end a product’s life, there are several key indicators that can, at the very least, make reaching such a decision much easier.
1) Your Product’s Industry Is Poised for Change
In 2008, a multitude of companies that produce sports memorabilia began discontinuing otherwise popular drinking cups that featured logos of various professional sports teams. Despite adequate sales of the cups, the companies shrewdly perceived that the corn plastic used to produce the cups was about to become considerably more expensive.
That year, commodity market conditions caused the price of corn to reach a record $8 per bushel (up from $3 in 2007).
Rather than committing to the same product, the companies discontinued the line and soon thereafter introduced revamped drinking cups fashioned from different base materials.
A multitude of companies across a broad expanse of industries, however, were not as forward thinking on the matter of corn derivatives. And the consequences were expensive.
2) Your Product Is No Longer Consistent with Your Evolving Brand
Many successful small business owners and marketing gurus evaluate the viability of a product within the context of the business brand behind its distribution.
Incredibly, according to the “Software Product Management: Best Practices” report from Software Minds, only 20 percent of all contemporary computer software that is released will ever be flatly discontinued. Instead, software is routinely updated to repair bugs or meet changing consumer needs and trends. Unfortunately, if your product isn’t computer software, issuing an update or a new version can be cumbersome and counterproductive. Who is in the market for a cutting-edge VCR today?
3) Your Business Needs a Sacrificial Catalyst
Nothing catches the attention of customers like the discontinuation of an old product or the introduction of a new one. Barring circumstances in which a floundering product is causing your company to hemorrhage money, discontinuing a product may actually attract above-average business as consumer interest in what’s next is piqued. For this reason, many small business coaches and marketing experts refer to discontinued products as “sacrificial catalysts.” Put differently, hyping the end of one product can spark new business if you do so at the point where a new product is being introduced.