What is product sunsetting?
Sunsetting a product means strategically planning for its eventual removal from the market and ceasing any further development, marketing, or sales. It's an intentional phasing out of an aging product at the end of its life cycle in order to shift focus onto newer and more innovative offerings, versus just letting a product fade away or immediately pulling it without warning.
Sunsetting allows you to discontinue a product and allocate resources and attention to where you can provide the most value.
Now that you know what sunsetting a product means, we’ll dive deeper. In this guide, we’re going to cover:
- What is a sunset strategy?
- Why companies sunset products
- Examples of sunsetting products from top brands
- How to sunset a product: 8 key steps
- Product sunsetting best practices
Let’s get into it.
What is a sunset strategy?
A sunset strategy is a comprehensive, phased plan that guides a product through end-of-life and eventual removal from the market.
It goes into the what, why, who, when, and how of discontinuing a product strategically, typically covering stakeholder communications, customer transitions, operational wind-downs, and reallocation of resources – all with the intent of optimizing value recovery as part of pivoting strategically.
A sunset strategy both minimizes disruptions from a product's discontinuation and sets the stage for replacement offerings to thrive. Orchestrated smoothly, it can be a value-maximizing pivot.
Why companies sunset products
Companies decide to sunset a product for a variety of strategic, financial, technological, and risk-related reasons. Careful analysis is required to build the business case and ensure sunsetting is the right path forward vs. revitalization or ramp down.
Businesses that decide to sunset a product will find themselves asking questions like:
- Does the product still fit within the overall company vision and priorities?
- Is demand declining due to market saturation, lack of differentiation, or waning relevance to customer needs?
- Is the product still profitable? Are margins declining over time? What is the opportunity cost of resources being allocated?
- Is supporting outdated legacy technology incompatible with innovation? Are capabilities lacking vs. competitors?
- Are overhead, customer support, and production costs too high to sustain? Does complexity need to be reduced?
- Does the product carry regulatory, legal, PR, or other significant risks if continued?
- Does the product create unhealthy internal competition? Is there overlap after a merger or acquisition?
Once leadership is aligned on the sunsetting rationale, detailed planning begins.
Let’s take a deeper look into why companies may choose to sunset a product:
Strategic alignment and portfolio fit
If the product is no longer strategically relevant: Shifts in corporate strategy or the market may render a product obsolete despite it being viable financially. Resources are better allocated elsewhere.
Market dynamics and the technological landscape
The product is technologically outdated: Advancements may mean supporting older technology is no longer sustainable or competitive. Upgrading is preferred over extending life cycles.
The product is no longer profitable: Lagging sales, rising costs, or declining margins may make the product unprofitable to maintain and not worth reinvesting in.
Liability and risks
There are high liability or reputational risks: Severe defects, safety issues or compliance gaps may make the risks and downsides of continuation too substantial, regardless of financials.
Mergers and acquisitions dictate consolidations or replacements to streamline portfolios and reduce redundancies.
Examples of top brands sunsetting products
Sunsetting products is a common practice among businesses, even top brands, as they adapt to changing market dynamics, technological advancements, or strategic shifts. Here are some notable examples:
Kodak discontinuing its iconic Kodachrome film
Kodak's decision to discontinue its iconic Kodachrome film in 2009 marked the end of an era in photography. This move was driven by the massive shift from analog to digital photography. Despite its rich history and the emotional attachment of many photographers to the film, dwindling demand made its production unsustainable.
Kodak's sunsetting of Kodachrome is a classic example of a company adapting to technological evolution. And while customers were upset, clear timelines and rationale allowed the transition to digital formats.
Netflix shuttering its legacy DVD mailing service
As streaming took over, Netflix phased out its original DVDs-by-mail service which had defined the company initially. Netflix, once known primarily for its DVD rental service, has shifted focus to streaming, reflecting changes in consumer preferences and technological advancements.
The gradual phasing out of its DVD service demonstrates Netflix's strategic pivot towards digital streaming, a move that has been central to its growth and success in the highly competitive entertainment sector. The brand managed to achieve this while ensuring minimal customer friction.
Verizon sunsetting its 2G network
With demands for higher-speed networks, Verizon communicated far in advance that their 2G network would be retired by a set date and offered phone upgrade options. The company announced plans to sunset its 2G network to free up resources and focus on more advanced, efficient 4G LTE and 5G technologies.
This decision reflects the telecom industry's evolution and the need to stay current with faster, more reliable network technologies. Sunsetting 2G allows Verizon to reallocate spectrum and infrastructure towards technologies that better serve modern communication demands.
Apple removing analog ports from new MacBooks
Apple's removal of various analog ports, including the traditional USB ports, HDMI, and SD card slots from its new MacBooks, illustrates a move towards sleeker, more modern design and functionality. This change, favoring USB-C and Thunderbolt ports, reflects Apple's vision of a wireless, streamlined future. It also shows how sunsetting older technologies can push consumers towards newer standards.
It was an early controversial move that favored the “minimalist” look, that being said it was met with some resistance and an amount of inconvenience on the customers’ part.
Microsoft ending support for Windows XP
Microsoft ended support for Windows XP, one of its most popular operating systems, in 2014. Though unpopular with small businesses, Microsoft stood firm in its decision to stop supporting the outdated XP to progress its OS.
This move was a part of Microsoft's life cycle policy, allowing them to focus resources on supporting newer, more secure, and technologically advanced operating systems. Ending XP's support meant no more updates or security patches, pushing users to upgrade to newer versions for better security and features.
Blackberry ending its classic smartphones
BlackBerry announced in 2016 that it would stop manufacturing its classic smartphone models. This decision came as the company struggled to compete with smartphones from companies like Apple and Samsung.
BlackBerry's shift from hardware to software and services was a strategic repositioning in response to market changes.
How to sunset a product: 8 key steps
When the difficult decision is made to sunset a product, there are several best practices you should follow as product marketers to ensure it’s done gracefully:
1. Developing a business case
The journey of sunsetting a product begins with a critical, foundational step: Developing a comprehensive business case. This phase is about meticulous scrutiny, where quantitative and qualitative factors intertwine to shape a convincing rationale.
It's an exercise in foresight, weighing the product's strategic alignment with your company's evolving vision against its current financial performance. Risks are assessed, resources are examined, and the dual paths of maintaining versus sunsetting the product are laid bare.
This step isn’t just about looking at numbers; it's about understanding the story they tell and the future they predict.
2. Setting an end-of-life date and public announcement
This step involves setting a definitive end-of-life date for the product and communicating it clearly to all stakeholders. The news should be shared across all company channels and external media – don't let customers hear it secondhand! Press releases, blog posts, and client letters are all opportunities to control the narrative.
It's a critical component of the sunsetting process as it provides a clear and firm timeline for the transition. This date should be far enough in the future (6-12 months) to allow for a transition period but firm enough that stakeholders understand the product's finite lifespan.
The announcement needs to be made through both company channels and external media to ensure transparency and to control the narrative surrounding the product's discontinuation. This step is essential for managing expectations and maintaining trust among customers, partners, and the market at large.
3. Creating a sunset plan
Articulating the strategic reasons behind the sunset is about building a bridge of understanding with your audience. It's an exercise in transparency and trust-building, explaining not just the “what” but the “why” behind the decision.
With a solid business case in hand, the focus shifts to mapping out the journey ahead. A well-crafted sunset plan is detailed and precise, and considers every facet of the operation. This plan’s a comprehensive strategy involving various departments – marketing, sales, support, and operations – each with a role to play in this coordinated endeavor.
Key milestones are set, responsibilities are assigned, and success metrics are defined, ensuring that every team member knows their part in this intricate dance of transition.
Articulating the strategic business reasons behind sunsetting helps customers understand it’s not personal. Be transparent about shifting company priorities, technical challenges, market dynamics, or cost realities that led to this decision.
4. Communicating the strategy
As the plan takes shape, engaging in early, transparent communication with internal stakeholders becomes paramount.
This isn’t just about disseminating information; it’s about building consensus, understanding concerns, and fostering an environment of shared purpose. Teams company-wide need to be in sync, acknowledging the impact and embracing the change.
This step is as much about listening as it’s about informing, ensuring that the internal machinery moves in unison toward a common goal.
The art of communication extends beyond the company walls. Developing a strategy for external communication is critical – it's about controlling the narrative, being thoughtful in timing, and selective in channel choices.
5. Managing transitions and support
Transition is a phase of transformation, and support is its cornerstone. As the final sunset date nears, begin ramping down servicing, maintenance, and operations related to the product. Make arrangements for any data retention or asset transfers if applicable.
Providing incentives and options for customers and partners means demonstrating commitment and care. Upgrades, migration tools, free trials, discounted upgrades, and alternative solutions are offered not as mere alternatives but as bridges to new opportunities. This phase is an affirmation of the company’s dedication to its users’ needs and preferences.
Facilitating a smooth transition for users is a testament to the company's commitment to customer experience. It’s about offering pathways, not dead ends, ensuring that every user feels supported and valued during the change.
The gradual ramping down of support and operations is a responsible retreat, a managed and considerate reduction in engagement. It’s about ensuring a seamless transition, both internally and externally.
6. Adjusting marketing and operations
Redirecting marketing and sales efforts is a strategic pivot, a sign of adaptability and responsiveness. It’s about aligning resources with new priorities and ensuring that the company’s messaging reflects its evolving direction. Marketing and sales resources should be redirected from the sunset product to replacement offerings as its discontinuation approaches. All messaging should be updated accordingly across channels.
Gradually reducing operations is a delicate process, akin to a well-choreographed ballet. This step means precise actions – scaling down production, managing inventory, and deactivating programs in a methodical manner.
7. Reallocating resources and tracking progress
As one chapter closes, resources are redirected to fuel new beginnings. Talent, budgets, and assets aren’t merely shuffled; they’re thoughtfully reallocated to areas of growth and innovation. This step reflects a proactive stance, ensuring the company remains dynamic and forward-thinking.
Monitoring the effectiveness of the sunset plan means you need to be vigilant, responsive, and ready to adapt. This continuous evaluation is crucial in ensuring the plan stays on course and achieves its intended outcomes.
8. Final phases and review
For physical products, develop strategies to sell off remaining stock and parts through discounts, bundles, or other creative means. Don't let write-offs eat into margins unnecessarily. Liquidating the remaining inventory is a strategic maneuver. It's about minimizing losses and transforming remaining stock into an opportunity, a final nod to fiscal prudence and market savvy.
Reaching the sunset date marks a significant milestone. The final act is a period of reflection, ensuring that every aspect of the process has been executed with precision and consideration.
The journey concludes, but the learning continues. A post-sunset review is a moment of introspection, an opportunity to glean insights and understand the efficacy of the entire process.
By navigating these steps thoughtfully, a company not only ensures a smooth transition during product sunsetting but also reinforces its commitment to strategic foresight, operational excellence, and customer-centricity.
This approach turns the end of one product’s journey into a springboard for future innovation and growth.
Product sunsetting best practices
Thorough market analysis
Before deciding to sunset a product, conduct a comprehensive market analysis. This involves evaluating the current demand, future market trends, and the product's alignment with the company's strategic goals.
Understanding why the product is no longer viable – be it due to technological advancements, changes in consumer preferences, or competitive pressures – is crucial. This analysis forms the backbone of your decision-making process, ensuring that sunsetting is indeed the best course of action.
Develop a clear sunsetting strategy
A well-defined sunsetting strategy is essential. This strategy should outline the timeline for phasing out the product, identify key milestones, and detail how the process will be managed across different departments.
It's important to consider how to reallocate resources, manage inventory, and handle any legal or contractual obligations. This plan serves as a roadmap, guiding the company through each stage of the sunsetting process.
Transparent and consistent communication
Maintain transparency with all stakeholders, including employees, customers, and partners. Clear and consistent communication helps manage expectations and minimize confusion or backlash. Explain the reasons behind the decision and how it aligns with the company’s broader goals.
Offering support and transition options
Providing support and alternative options to customers is key to maintaining goodwill. This could include special offers on newer products, migration assistance, or extended support for a certain period.
Ensuring a smooth transition for customers not only helps in retaining their loyalty but also strengthens the brand’s reputation for being customer-centric.
Manage the operational wind-down efficiently
The operational aspect of sunsetting a product involves managing inventory, halting production, and reallocating resources. This process should be handled efficiently to avoid unnecessary costs and waste.
Strategic liquidation of inventory, methodical ramp-down of services, and thoughtful reallocation of resources and personnel are important for maintaining operational and financial balance during the transition.
Maintain legal and regulatory compliance
Ensure compliance with all legal and regulatory requirements during the sunsetting process. This includes honoring warranties, processing refunds where applicable, and adhering to any industry-specific regulations.
Proper legal due diligence helps avoid potential lawsuits or regulatory penalties, which can be costly and damaging to the company's reputation.
Gathering feedback and learning
Collect feedback from both customers and internal teams throughout the sunsetting process. Understanding their experiences, concerns, and suggestions can provide valuable insights for future product developments and sunsetting processes.
This feedback loop is vital for continuous improvement and can help refine strategies for future product launches or discontinuations.
Post-sunset review and analysis
After completing the sunsetting process, conduct a thorough review and analysis. Assess how well the process was managed, the impact on the company’s financials and brand image, and how effectively customer transitions were handled.
This analysis is crucial for learning from the experience and applying these lessons to future product management strategies.
Final thoughts on mindful product sunsetting
The sunsetting of a product is a profound moment. It signifies the closing of a chapter – the deliberate yet dignified end to a life cycle. Sunsetting is an act of strategy and foresight, of understanding when something's time has passed and having the courage to let it go.
It takes wisdom to recognize that clinging to the past can overshadow the future. There’s artistry in releasing what no longer serves growth and innovation.
Done right, it’s an ode to fluidity – a carefully orchestrated transition that reminds us of the inevitability of change. We honor a product's legacy by sunsetting mindfully. We pay tribute to its contributions by ensuring its final phase is gracefully executed.
Sunsetting takes resilience. It means being comfortable with confronting loss, discomfort, and the difficult decisions that progress requires.
But, as the old saying goes, as one door closes, another opens.