Products go into obsolescence primarily due to two reasons – functional obsolescence or fashion obsolescence. This has led to the creation of a formal end-of-life plan for many companies. It has become a strategically important tool that steers higher annual recurring revenue, helps smooth transition between two different business models, and improves the lifetime customer value.Â
End of Life (EOL)Â is when a product reaches the end of its product life cycle and is consequently withdrawn from the market. It can be either completely pulled out from the market without substituting it or, in many cases, substituting it with a new edition. This could be due to a change in market demands, technology, competitive pressure, unprofitability, or the product has become obsolete and replaced by functionally richer technology. Â Once obsolete, the product is not sold, improved, maintained, or supported.
The following critical factors should be kept in mind while developing a product end of life plan-Â
1.Profitability and Marketability: The product with the lowest profit potential is often selected for an EOL Plan. However, a product may also be selected to give way to newer products with better technology or in a case when the product is not marketable.Â
2.Sustainability: The choice between Remanufacture, Repair/ Reuse, Disposal, and Recycle is often based on the impact the product may have on the environment.
3. Customer Loyalty: Come up with alternative solutions for customer retention. Maintain customer loyalty by ranking customers based on monthly recurring revenue. In case there is a repeatable pattern of happy and profitable customers, you have potentially identified the issue—and it might not be the product.
4.Technical Implications: The production process for the product needs to be considered, the technical implications of the selected product on the existing production line, available technology, and even the labour force.
5. Negative implications: Consideration should be given to the contractual or legal implications that come after the sale of the product has been stopped.Â
6.Government Policies: The selection of the product is significantly influenced by government policies regarding the product or the industry as a whole. For example, promoting the use of electric vehicles could affect the life cycle of petrol or diesel-driven vehicles.
7. Business objectives: The contributions of the product to the realization of the company’s short and long-range objectives must be considered before selection.Â
8. Physical concerns: In case it’s a physical product, the implications of discontinuing the product in terms of customer replacement support, inventory, returns, or channel partners.
9. Risks: Consider the risks associated with discontinuing the product, such as loss of customers or possibly creating retaliation on social media if customers are unhappy that you have discontinued the product.
Different types of product have different issues at the end of their life as follows: –
Reasons for discontinuing specific products
Cost-effectiveness or innovation
Communication of transition plans for discontinued productsÂ
Details of the product or product line are being discontinued.
Details of the versions available and the versions that will be discontinued immediately or over a period of time
Internal groups at the company
Resellers
Channel partners
Customers
Take over by another company,
New product launch,
Continue sale for a limited time,
Shut down product in near future
Date of discontinuance
Spare parts availability
Assistance in Upgrading versions,
Customer and Technical support options,
Compatibility, Â
Exchange or Upgrade Options
Best practices to be implemented when retiring a product:
The EOL phase of the product life cycle is as important to the continued success of a company’s product strategy as the introduction, growth, and maturity phases. For product managers, working on end-of-life initiatives provides a great opportunity. Gaining insights from seeing a product reach its natural end of life after a long run in the market is fulfilling.
Interested to learn all about Product Management from the best minds in the industry? Check out our Product Management Course. This 6-month-long program takes place online through live instructor-led sessions. It is the only program in India that offers the ‘Bring Your Own Product (BYOP)’ feature so that learners can build their product idea into a full-blown product, and go through an entire Product Development lifecycle. Not only this, but this is the only program in India with a curriculum that conforms to the 5i Framework. Post completion, learners receive a joint certification from the Indian Institute of Management, Indore, and Jigsaw Academy.Â
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