Thursday, October 12, 2006

Lessons from Big Oil

When is your brand's Hubbert's Peak?

In any market there comes a time when production peaks and then begins to decline. In the global petroleum business Peak Oil is the date when production starts to decrease. Early in the life cycle production increases as infrastructure is added. Later it falls as resources are depleted.

Some time soon, the oil category will peak.

Looks similar to any product lifecycle chart I've seen.

At some point, product sales slip into decline.

Now distribution represents infrastructure.
And demand represents resources.

The difference between brands is often how long the 'maturity' phase lasts. In the case of oil the peak is a singular moment in time. For a lot of products it is often a flat line for some period.

The point remains, at some point we need to plan for product obsolescence: How do we manage relationships with customers? When the firm IS the brand, this gets a bit tricky with the short-term focus of financial markets.

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