Sometimes words and phrases have more than one meaning. We think of “sustaining the business” as an ability to retain customers and make money over the long-term. “Sustainable forests” are those in which trees are replanted when their counterparts are harvested so we can have lumber for our homes and furniture. Yet, “sustainable innovation” means designing and developing new products that follow practices that respect both economic and environmental-friendly processes in their sourcing, use, and return (disposal). Thus, sustainability plays a significant role in life cycle management for new product development (NPD).
The Product Life Cycle (PLC)
A product life cycle (PLC) is defined as the normal sequence of steps through which most products progress. (You can learn more about the PLC in the professional development course on Disruptive Innovation. The topic of PLC is covered for both NPDP and PEM candidates.) In the Introduction phase, a product is initially commercialized. A company will work to create brand awareness and may not make a profit in this stage. The market is small and costs are high for manufacturing and in recovering development expenses.
The next stage is the Growth phase. At this point in time, sales accelerate and firms begin to realize profits. Costs begin to decline as manufacturing takes advantage of economies of scale. More customers are aware of the product and sales volumes increase.
As products become more attractive in a market, competitors will begin to sell products with similar functionality. This is called the Maturity phase of the PLC. Sales peak during this stage and companies need to differentiate their products with added features and complementing services in order to maintain market share.
Finally, as trends and customers’ habits change, products enter the Decline stage. During this phase, sales and profits tumble. Companies must make tough decisions to either withdraw from the market or must make a significant commitment to revamp the product. In the latter case, the revised product will re-enter the PLC at the Introduction phase.
Elements of Sustainability
Focusing on sustainability is really just another application of customer-centric marketing. Sustainable innovation strives to meet the needs of one generation of customers without compromising the ability of future generations to meet their own needs. Working on sustainable new product development takes into account three key elements called the Triple Bottom Line:
- People, and
These elements both drive and support a business strategy’s financial goals (profit), social objectives (people), and environmental commitments (planet). Metrics of sustainable innovation are built on financial, social, and environmental goals.
Note that sustainability issues are encountered throughout the product development and marketing processes. Customers are interested in preserving the environment and so firms should address the Triple Bottom Line in raw material selection, for example. Consumers are also more aware than ever of disparities in labor markets around the world, so companies can address social concerns through design and manufacture of products with appropriate attention to the people element of the Triple Bottom Line. Finally, without financial motives, companies cannot support social or environmental causes, so new products must drive financial and profitability goals, too. A well-conceived and unique business model allows a firm to differentiate itself from competitors and focus on the Triple Bottom Line in unique ways.
Sustainability and the PLC
Management makes a series of decisions throughout the product life cycle regarding the product, price, distribution (place), and promotions (e.g. advertising, marketing, and direct selling). Not surprisingly, these decisions today must also look at the customer’s perception of the firm’s impact on the Triple Bottom Line. For instance, as consumers demand more eco-friendly products, NPD practitioners and marketers will undertake decisions regarding recyclable packaging for the product. Promotions in the Introductory phase can target customers with higher environmental values by emphasizing the reduced impact by using packaging that can be easily recycled. Such marketing can help to build a favorable brand awareness and support the firm’s strategic commitment to the environment.
During the Growth and Maturity phases, manufacturing is often expanded –especially in international arenas to take advantage of lower cost labor and varying regulatory environments. A firm committed to the Triple Bottom Line and sustainable innovation will maintain the highest standards for fair pay and pollution control regardless of the countries in which it operates. The company gains a competitive advantage by reducing fuel consumption in distributing the product in global markets by establishing factories around the world. Again, the company’s strategy, supported by its actions, will build brand preference and differentiation with customers focused on social and environmental concerns.
Finally, minimizing disposal impacts leads to sustainable innovation decisions in the design and development of a new product. We all know the mantra of reduce, reuse, and recycle. Companies committed to a product life cycle with these principles can outlive the Decline stage by breathing new life into old or retired products. Reduce, reuse, and recycle also drive early development decisions regarding materials selection, manufacturability, and product usage.
Going Forward: Sustainability in NPD
As consumers become more conscientious of their purchase decisions and the impact they have on profit, people, and the planet, NPD practitioners and engineering managers need to focus more on sustainable innovation. Products have a given life cycle and a sustainable innovation strategy will encompass design decisions into the product development process to ensure the mission and vision are appropriately executed. Life cycle assessments will look at a product from perspectives of raw materials acquisition, manufacturing, use, and end-of-life disposal. Companies that meet customer expectations that satisfy financial, social, and environmental needs will succeed with NPD and innovation near the long-term.
Note that life cycle management, including sustainability, is now a part of the New Product Development Professional (NPDP) certification exam (starting May 2017). To learn more, please check out our NPDP workshops. We know that time is really the fourth critical element in managing products, so we want to make it simple for you to study, learn, and earn your professional certifications. For more information, please contact us at email@example.com or 281-280-8717.
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