Thursday, September 19, 2013
TV and The Product Lifecycle
We all know that most new products and new businesses fail. Once a product or brand survives the early days it invariably has a lifecycle. A friend and I talked about this recently and followed up with some lively e-mails for quite a while. Essentially, he said that TV was in the “decline” phase according to classic marketing measures and its days as an ad medium were definitely numbered. I saw his point but thought that TV’s life as an ad medium was longer than he predicted.
Let’s back up for a moment and define lifecycle phases. Remember that many products or services have their own unique, idiosyncratic lifecycles but, in general, they shape up as follows:
The Launch--here is where most products fail. To marketers, consumer acceptance is far more important than profit. So, money is spent and lost short term on advertising and promotion to build awareness. If the market is very competitive, you may come in low with penetration pricing to encourage consumer trial. Distribution is often spotty at this point.
Growth--as demand for your product increases, you can maintain pricing integrity. Also, distribution gets filled in and you spend more on promotion of all kinds to cover a wider audience than you did during the launch phase.
Maturity--you competition has sharpened their teeth or you have new entries in your space forcing you to often engage in a price war.
Decline--the whole category starts to decline because of technological innovation or changing tastes of the consumer. There are additional price cuts and advertising is often slashed to reduce costs. Sooner or later, the brand is sold or even discontinued.
I can see why my friend would say that TV is now in Stage #4--Decline. Average ratings for TV have been declining for years as the space is becoming more crowded with new choices be it cable channels, Netflix, Hulu, You Tube and all sorts of new alternatives on the horizon. And, increasingly, with people using their phones, laptops, or tablets to view, video usage is increasing as TV viewing is declining.
TV, however, is not dead yet. While virtually all of you reading this in the US have Netlfix and most have HBO, most people do not. The landscape has certainly changed and when it comes to brand building, TV can no longer carry most of the burden alone. Yet, TV still delivers a mass audience faster than anything else. And, let’s face it, the medium still has the ability to move product in most categories.
Perhaps most of all, TV still has a lot of the content! There is no question that it is not the advertising powerhouse that it once was. As I have said before in this blog, it was a great business and now it is a good business. May I suggest that you be careful when someone says that TV is ready to dry up and blow away? It may indeed be in Stage #4, Decline, but that decline is likely to be slower than many pundits forecast.
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