Monday, April 28, 2014

Product Life Cycle: Fitness Tracking Bands

The concept of product life cycle suggests that after a product or category is developed and introduced, it typically passes through a series of stages in the marketplace: growth, maturity, and decline. Revenue and profit increase during introduction and maturity, then peak and decline as sales slow. Competition is extremely fierce in the maturity stage, as marketers battle for sales in an increasingly saturated market.

This holds true in the traditional product life cycle of television sets, for instance: They were commercialized in the 1940s and by the 1990s, nearly every household in America possessed one or more TVs. To slow decline and attract buyers, TV marketers improve picture clarity, reduce footprint, and make other changes that encourage current TV owners to replace their current models. Of course, today's mobile devices are also cannibalizing TV sales, because on-the-go viewers often watch programming anywhere but in their living rooms. As a result, competition in the maturity stage comes from TVs as well as from other digital devices that were once outside the TV category.

Tech products tend to have increasingly compressed life cycles: the product (or category) moves through these stages very quickly, mainly because new innovations make older products obsolete or redundant. This was the case with the personal digital assistant (PDA), which came and went in fairly short order. The Palm--the prototypical handheld digital organizer--was introduced in 1996. Fifteen years later, the brand was gone, as was the product category, replaced by multifunction cell phones.

What about fitness tracking bands? Nike, one of the pioneers with its 2012 launch of the FuelBand, just announced it will refocus on the software side of fitness tracking, leaving the hardware of tracking bands to other competitors.

With so many bands available--and smartwatches and other devices trying to siphon off sales--Nike seems to have concluded that the category lacked sufficient long-term profit opportunity. The market isn't yet saturated, and new bands attract celebrity and media attention, but the category may have peaked anyway, if Nike's decisions are any indication.

Are fitness tracking bands in the maturity stage of the product life cycle barely two years after entering the marketplace?

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