The Product S Curve

Today’s management model is relatively simple compared to some of the others. The product S-curve describes the path a new product takes when it hits the market. In other words, it’s the sales life cycle of the product. Here’s how it works.

A new product hits the market. It took a lot of time and money to create, so the introductory price is pretty high. In most cases the product will be purchased by those in the high end of the middle and upper-class income levels.

After time the price of the product will drop, at which point it becomes more accessible to a larger market, like the average middle-income and even some low-income households. Not long after, everyone will have this new product and the sales will drop off again.

The entire process, if outlined, really looks like a flattened “S”.

A manager with foresight recognises that the market is on its way to satiation. At that point you should be prepared to either launch an “improved” version of the product or something completely new.

Market satiation, of course, is a lovely goal but isn’t always realistic. It depends on the product you are selling and how much people need (or believe they need) it. The question really becomes whether or not you are prepared to move forward once your product sales hit the latter part of the curve.

Do you have a plan?

Thanks again,

Sean McPheat

Managing Director

MTD Training   

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Updated on: 5 December, 2008

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