Deciding to end-of-life (EOL) a product is an important yet often neglected decision for a Product Manager. Products often continue in the market long after they should have been retired and while most companies have formal new product processes for defining and launching new products, many do not have the same discipline when deciding to end-of-life products. This article identifies some key considerations that can help you make an end-of-life decision.
Consider the product and category life cycle.
Products and product categories in the decline phase of their life cycle are often candidates for end-of-life. Also, the decision to develop the next generation of a product should trigger end-of-life consideration for the old version of the product.
Monitor key financial metrics.
Actively monitor revenue, unit shipments, profitability, and market share in the absolute sense and compared to trends over time. When a product enters the maturity and decline phase of the life cycle, revenue growth slows and ultimately declines. Profitability can turn negative even during the maturity phase depending on market conditions. Once a product no longer makes economic sense, it should be actively reviewed for retirement.
Compare the product portfolio to the product strategy.
Compare the product or product portfolio to the company, business unit, and product line strategy. Does each product continue to make sense relative to the strategic goals of the business? Does the product continue to align with, and leverage, the core competencies and skills of the company? If not, then an end-of-life decision should be considered.
Monitor redundancy in the product portfolio.
Periodically, review the overall product portfolio and look for areas of overlap and redundancy. Are there too many products in the portfolio?
Conduct a competitive and market analysis.
When doing competitive and market analysis, consider how changes in customer preferences, competitive solutions, or technology advancements could make current products obsolete in the future and consider whether an end-of-life decision is reasonable. Often it takes years to fully retire a product and getting ahead of the process can save considerable resources.
Build an end-of-life decision process.
Finally, if your company or business unit does not have an end-of-life decision process, create one. Establish an agreed upon set of rules to guide the end-of-life process. Identify conditions that trigger an end-of-life decision. Establish an end-of-life committee of key stakeholders to assist in the decision-making process.
Read more about retiring products and other key product management topics in my book, Mastering Product Management: A Step-By-Step Guide, available now in paperback and eBook.