Sometimes companies decide that they will no longer produce or sell a particular product, or even a whole product line. But what are the reasons for deleting a product or a complete product line from the company’s product portfolio? What are the factors by which companies can recognize that the “time to say goodbye” has arrived? In this article, we will investigate the prime reasons for deleting a product or product line.
Prime Reasons for Deleting a Product or Product Line
As you can imagine, there can be tons of different reasons for deleting a product from the portfolio. However, the prime reasons can be narrowed down to six key factors:
Many products have been dropped in the past because they were outdated by advances in technology. Alternatively, changes in customer interests may cause a product to become obsolete. For instance, older models of desktop computers have been dropped because newer models are faster and less expensive to produce.
Loss of Appeal
As consumer tastes change, companies may need to drop products that no longer appeal to the new tastes. Although these products may have some lasting loyalties that generate revenue, the manufacturers must decide whether these benefits are really worth the expense of keeping the item in their product mixes.
Changes in Company Objectives
Sometimes a product does not match a company’s current objectives. For example, in times of organizational restructuring, the company may decide to focus more on core competencies to increase effectiveness and sell some unrelated parts of the business to focus on these new objectives.
Replacement with new Products
Certainly, the reasons for deleting a product include the replacement of old products by new products. This can in turn have different reasons. For instance, the company may simply not have sufficient capacities to produce a new and an existing type of product. In this case, if it is not worth expanding, a choice must be made. This may lead to the deletion of the old product in order to enable the firm to produce the new one.
Lack of Profit
One of the simplest reasons for deleting a product is the lack of profit. Product developers may drop products when sales reach such a low level that the return on sales does not meet company objectives. Likewise, if margins become too low, for instance due to cheaper competitors, it may make sense to drop the product to avoid losses.
Conflict with other Products in the Line
Although not always obvious, sometimes products take business away from other products in the same product line. This can be detrimental if the product with the higher margins suffers. In this case, dropping the product may make most sense.