Many times we will find that the performance of different types of products in Amazon advertising will vary greatly, which is caused by the different stages of the products, and the different settlement goals they are in. Therefore, the advertising settings should be different. Products in life cycle stages have different advertising strategies and budgets. As such, the metrics you need to measure to determine whether that ad spend is successful also varies widely. The Amazon product life cycle follows some typical stages, and there are some rules that can be followed during these stages to ensure you get the most bang for your buck so that your ad spend doesn’t become a loss-making source for your Amazon business.
1. Amazon product life cycle
When you assess the long-term viability and sustainability of a product, there are four life cycle stages to consider:
Your product pricing strategy and the way you allocate your ad dollars will vary greatly during these stages, so let’s look at each stage in detail.
1. Entry period
This phase begins when you first introduce a new product to the market. Suppose you did your market research ahead of time and are entering a market that is not yet saturated and has high barriers to entry. Because of this limited competition, there are many relatively easy strategies to boost sales. You can temporarily lower your price with limited-time discounts, or set your initial price lower than your direct competitors to drive consumers to pay more attention to you. Both are reasonable strategies to start your sales in the initial stages, but not sustainable in the long term as your product starts to gain momentum and the competition is on the lookout. When your competitors notice, you can rest assured that they will adjust their tactics to crush you.
2. Growth period
Once you've established some initial demand and consumers start buying your product consistently, you move from the entry phase to the growth phase. As the number of product reviews increases, so will your sales. Sounds good, right? But not quite, success comes with imitation. Therefore, the initial success is likely to have established players in your market also starting to sell your product. You're the first to sell this, though, so the format is still in your favor, and as long as you keep sales growing and continue to make informed decisions, it will take some time for your competitors to catch up. However, this period of relative comfort does not last long.
3. Mature period
When your growth peaks and stays there, your product reaches maturity. The rapid growth you experienced during your formative years has leveled off. Your product sales may still be on the rise, but you're not seeing early rapid momentum. There are a lot of pitfalls at maturity. The market is no longer yours to control, when you bring a new product to the market, there is limited competition, this is a seller's market. It becomes a buyer’s market when everyone notices you and starts copying your product for a piece of the pie.
Where the risk is lower in the early stages, the risk in the mature stage is greater. As market saturation increases, you as a seller are motivated to stay one step ahead and be creative to stay ahead. With this shift, competition is more intense, and nuances will start to have an impact. The most important strategies for maturity are iteration and differentiation. The main question you have to ask yourself is: How can I adjust my product to be different, but still maintain its original competitiveness and usefulness? What changes can I bring to the market to re-energize my customers (color, shape, size, etc.)? If you don't manage these factors effectively during maturity, your product will start to lose customer interest and sales will start to plummet. If this happens, your options will be limited.
4. Recession period
During a recession, potential customers no longer show any interest in your product. Sales start to drop, and your competitors start to take market share from the customer base that once propelled you into the growth phase. A drop in sales usually forces you to go back to some of the things you had to do in the entry period:
1. Lower prices to attract customers;
2. Carry out various promotions to arouse the interest of customers again;
If these strategies fail, the next best option is to clear inventory as quickly as possible, cut losses, and move on. If you have excess inventory in your FBA warehouse, you will want to sell as quickly as possible and avoid paying storage fees.
As an Amazon seller, the recession is a very tough time, but it's not the end of the world. Sometimes, no matter how hard you try to keep the product going, there are too many market forces working against you. The Amazon Product Lifecycle aligns in many ways with the Amazon Advertising lifecycle. The stages overlap in many ways, and what those overlaps mean and what the right strategy is to employ is critical to ensuring your ROI.
The stages of the Amazon Advertising lifecycle
Just like there are four stages in the product life cycle, there are three stages in the Amazon Advertising life cycle.
Decisions made during these stages can change the trajectory of your Amazon business, for better or worse. As your product changes throughout its lifecycle, it's important to consider how to optimize your ads to ensure that you're not spending blindly and that you're spending for your intended purpose.
1. Start-up period
While there may be a small amount of competition in your market and you gain some word of mouth, that doesn't mean it's enough to keep you going. Every successful Amazon product has a well-established foundation based on organic traffic and a well-designed advertising campaign.
When to start your campaign during the launch period can vary depending on the type of products you sell and your inventory. If you have inventory that you can sell as soon as it hits shelves and are competitive enough in your market, you should consider advertising from the start, and when it aligns with your other marketing methods, you can quickly get A group of early customers. But if your market is more saturated and competitive, it might be a good idea to hold off on an ad campaign until your product gets some reviews.
The start-up ad is a testing ground. You should try different types of ads, different durations, and different spend amounts for different audiences to understand what drives the results you seek. Like the entry phase of Amazon's product life cycle, if customers can't see your product, nothing else matters. Once you see it, you can adjust your ad to optimize how much you want to pay per click and increase the click-through rate you need to achieve to ensure a good ROI sale.
If you target these ads correctly, you should have a lot of actionable data. You'll see which search terms are showing more impressions, indicating keywords worthy of your future ad campaigns. A keyword’s CTR will give you an idea of what your market cares about, and the conversion rates for those clicks begin to surface where you need to start optimizing as you move potential customers from awareness to interest, to decision-making, and ultimately purchase action . Consistent sales during the launch period allow you to grow and eventually have a mature product that can be a healthy part of your product portfolio.
2. Maintenance period
Once your product has been on the market for a few months, you move from the entry phase of the life cycle into the growth phase.
You have a lot of data at hand, and your product detail page has likely gone through several iterations. These iterations give you a strong intuition about your product and the right marketing mix. You've built a solid product-market fit, and you're actively using keywords that you've identified as unique to your product that are very effective at generating responses and conversions from your target customers.
At this point, your product page serves a dual purpose, both to showcase what you're selling and to serve as a landing page for an ad campaign. A great strategy for the maintenance period is to create campaigns that point directly to your product pages, since at this point you've built enough presence in your market to be competitive in doing so. During the maintenance period, you have learned what you need to know about the product. Given that the goal is ongoing, carefully optimize your campaigns and slowly but steadily expand your spend, so your growth remains incremental but predictable, and this overall growth is the key to entering the maturity of the product life cycle.
As with any other platform that monetizes from advertising, the bigger your campaign is, the more likely Amazon will start rewarding you with a high organic ranking for your desired primary keyword. When this spend is properly targeted and your CTR aligns with your conversion growth, organic traffic growth will also be very rapid, and organic order growth will greatly amortize marketing expenses.
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3. Profitable period
In a profitable period, your product has been on the market for nearly a year and sales have been rising during that time. You've been able to generate solid four and five star reviews. You test different content on your product pages to boost conversions, further solidifying your ability to get organic traffic from Amazon. But the profitability period may have entered dangerous territory because your product has fully matured.
When you get to profitability, Amazon Advertising is no longer a testing ground and an experimental lab, they're a profit machine that helps you take your sales to the next level. And now that you have more money to spend, you can use some new and unique strategies to experiment with different effects of your ads. This new strategy will include strategies designed to fend off competition only, more testing of mid- and long-tail keywords, ads to further scale by running competitor keywords and ASINs , and even targeting at the cognitive stage of the population. Higher-level advertising strategies.
When you are in a profitable period, the main metric you care about is Acos . To make sure you get the Acos you need, it's crucial to keep a close eye on your CPC costs and ad-related conversion rates. Keeping a close eye on these will help you maintain a healthy profitability and sales velocity, allowing you to keep running smoothly without risking a business downturn.
In general, the process is similar whether you're focusing on the fundamentals of the product life cycle or the money you spend on advertising. At a certain point, you're new to a market with limited competition, and your main goal here is to gain some base of valid customers that can help you win some sales and gain a foothold. Once you have some magnitudes, and while maintaining good momentum, your magnitudes will continue to expand. As it happens, the goals of your campaigns change, take advantage of that growth and analyze the keywords that are helping you grow to maximize and stabilize your sales.
What happens next depends entirely on your sensitivity and your ability to respond to rapidly changing market conditions. If your customers' interest starts to dwindle, whether it's because your product is no longer "fashionable" or it just falls off naturally, you need to get your brand protection work done and your primary keyword dynamism done right away so you can still continue Maintain the magnitude of your business to maintain market share, while also preventing your competitors from growing to dampen threats.