The product life cycle is a crucial part of understanding the development of your product.
Keep reading to know the ins and outs of the product life cycle and how you can use it for your business.
What Is a Product Life Cycle?
Consider the example of CD players. Their sales decreased significantly in the mid-2000s. Despite the discontinued CD players, you can still use them for another decade.
The point is that this serves as an excellent example of a product whose life cycle has reached its endpoint.
When you launch a product in the market, it is often not in the common knowledge of the customer.
Its life cycle begins from new and valuable to shifting towards regular updates. It finally retires from its market circulation at a certain point.
The product’s retirement depends on decreased sales, higher competition, lesser demand, and saturation.
The product life cycle is continuous. Companies usually rely on product life cycle analysis to understand market demands. They implement strategies to increase their product lifespan.
You can find many efficient product management tools in the market to make your work easier and more effective.
Please keep reading to learn how the product life cycle works and how its analysis helps companies.
What Is Agile Product Life Cycle Management?
Agile Product Lifecycle Management, abbreviated as Agile PLM and owned by Oracle, helps organizations manage the product life cycle from womb to tomb.
It is a solution used in product development to enhance innovation, advanced planning, manufacturing, engineering, scheduling, execution, and managing of all manufacturing processes. Moreover, it helps the organization deal with increasing complexity and engineering tasks to compete globally.
Remember not to confuse Product Lifecycle Management (PLM) with Product Lifecycle Management Marketing (PLCM). The former is concerned with the engineering factor of the product. In contrast, the latter is concerned with the commercial aspect of the product.
There is a form of PLM that is people-centric. It focuses on the design phase, which contrasts with traditional PLM.
What Are the 5 Stages of a Product Life Cycle?
The product life cycle unfolds in four stages – Development, Introduction, Growth, Maturity, and Decline. Every stage is distinct, with costs, risks, and opportunities they bring.
When you go through these stages or think about developing your product, remember that there are differences. The differences entail understanding how long a product will remain in a particular stage of the product life cycle.
Stage 1: Development
Development is when the cost of production keeps on rising while there is no revenue generated.
Some products require years of research and tons of capital investment. And others are quicker to develop and launch in the market.
At this stage of the product lifecycle, the risk is very high. Hence, funding is limited.
Thus, many companies use the strategy to direct the revenue generated from their current products towards investing in another startup.
In other cases, entrepreneurs use their resources or savings to start their businesses.
Stage 2: Introduction
The introduction is when the product development has almost reached its end, and it’s time to market the product and create awareness about its launch.
Unlike the previous stage, the marketing costs are higher in this product lifecycle stage. It becomes crucial to reach out to potential clients and customers.
Intellectual property rights protection gets acquired, and funding for the business grows through investors and stakeholders. The product pricing may be high, and the price point may increase to recover the cost of production.
Stage 3: Growth
At this stage, customers finally welcome the product.
Your business competes to increase its market share because other companies know your product and its place in the market.
If there are many competitors, your product’s price is likely less. However, suppose your product is innovative with lesser competition. In such scenarios, the prices of your product may remain high for a longer time.
This stage increases the product demand and profits while aiming at an expanded target audience. The growth stage also aims to improve the product’s features and functions.
Stage 4: Maturity
Maturity is the stage of the product lifecycle where your sales will slow down or, in some cases, even stop. It results from increased competition to maintain your market share and saturation.
We call this the ‘shake-off point,’ when less successful competitors exit the market.
Companies will likely alter or develop a new product to cater to different consumer needs. You strategically use innovation to modify the product and maintain the market share.
Prices are likely to decline to meet high competition. Production costs have decreased due to higher efficiency. You don’t require additional funding at this stage.
Stage 5: Decline
The product lifecycle stage is associated with a decline in revenue, resulting from several factors.
Factors include market saturation, increased competition, decreased demand, technological evolution, or changing user needs.
Here are a few options businesses have at this stage – they can discontinue the product.
They can tap into new markets by targeting new audiences and announcing new features or improvements.
They can also sell the manufacturing rights to another business that is doing well and will continue to add new features to this product.
When you find a product launched as ‘new and improved,’ consider it has passed through the decline stage.
Which Is the Correct Order of the Product Life Cycle?
Before your product hits the shelves, you will tweak your concept, test it, and develop a launch strategy. Concept testing with huge potential customers is a significant part of this step.
You’ll know your target market’s response to your idea and bring alterations based on their feedback before you’ve even started creating with concept testing.
You’ll incur many expenses during the first phase without earning money from your new product. You may fund this stage yourself or seek investors.
Market research is required when launching a new product in the market. Market research helps in making decisions about:
- What is the endpoint for your product, and how will it get there?
- Who will buy it?
- How much will you charge for it? And most importantly,
- If anyone will want to purchase your product at all.
During the growth stage, organizations must start asking new questions to expand. They also need to investigate new competitors, new potential markets, and any changes in brand image.
When your product reaches maturity, its momentum will either peak or plateau. To help propel your product to tremendous success, focus your research efforts on competitive intelligence to acquire some of their customer bases.
As your product or service’s popularity wane, your company should consider pivoting your product or business strategy.
Identifying what modifications may positively impact your sales and analyzing your customers’ responsiveness to change will aid in the potential for revenue growth.
How does Product Life Cycle work?
As previously stated, there are five stages in a product’s life cycle: development, introduction, growth, maturity, and decline. A product must go through design, research, and development before going through the above stages.
Once a product is feasible and potentially profitable, it can be manufactured, promoted, and distributed to the market. The product life cycle initiates at this point.
The different phases of a product’s life cycle assess how you advertise the product to consumers. When a product gets skillfully introduced to the market, it should experience an increase in growth and popularity. You should also push older products out of the market. As the new product gains traction, marketing and production costs decrease.
As a product approaches maturity and declines in demand, you could pull it out of the market. Then, you can potentially replace it with a newer alternative.
Monitoring the four life cycle stages can significantly boost profitability and maximize returns. However, failing to do so results in a product lacking potential and shelf life.
What Are Product Life Cycle Examples?
To help you understand the product life cycle, the following examples demonstrate it.
The typewriter gained fame in the late 19th century because it revolutionized the writing experience.
However, modern tools like laptops, tablets, and phones have replaced typewriters by posing as more potent competitors.
Hence, the revenues and demand for typewriters eventually declined. You can mark this as the decline stage of the product life cycle.
Once considered a miraculous invention, mobile phones went through their introduction period between the years 1985 to 2000. With constant upgrades and the innovation of smartphones, mobile phones are at their maturity stage of the product life cycle.
Though electric vehicles are by Tesla, they are not necessarily new. They have existed and been researched way before that.
The kind of innovation motor companies like Tesla has brought signals its growth stage.
Artificial Intelligence Products
Artificial intelligence (AI) products are constantly pushing the boundaries of invention.
Though they have been developing for a long time, they’re still in their introduction stage. It occurs because products are still being tested and not fully adopted in markets.
How Is the Product Life Cycle Calculated?
You calculate the product life cycle through product life cycle analysis. Product life cycle analysis helps us understand if the product caters to the target audience’s needs.
The most efficient way to know what your target audience needs is by sending out surveys to them.
If not, you can focus the shift, and scope creeps identification could happen.
A product lifecycle assessment identifies where the product is in the cycle. Such review, in turn, helps the company strategize the action plan to continue generating target numbers of sales.
It is relevant to the products in their maturity or decline stages.
Why Is the Product Life Cycle Important?
The product life cycle is helpful for managers, developers, and designers.
Identifying the life cycle stage the product is in offers enough insights.
The insights include increasing that stage’s longevity and implementing strategies that can keep the product from declining.
The following are the key advantages of the product life cycle:
Sales Forecast: Sales indicates the product’s lifespan. Improving sales maximizes the life cycle of a product.
Effective Planning: Once the company can predict sales performance, it becomes easier to plan and implement strategies that benefit the company in the long run.
Competitive Advantage: The product life cycle helps companies compete effectively since the stage of the product is identified. And then, you can implement a set of strategies accordingly.
Decision Making: The product life cycle can help the company make crucial decisions related to product development. The essential choices include upgrades, improvement, and additional features.
Target Audience: The product life cycle helps target the right audience and identifies if the product meets their needs. In case of decreased sales, you can also determine the focus-reshifting of the target population.
The product life cycle is another tool for making a customer-centric product. Use it to achieve your product goals today.
Product management software like Chisel aspires to be the go-to solution for product managers in the product lifecycle management market. It is one of numerous product management solutions that have emerged over time.
We at Chisel offer various product lifecycle management solutions, project management implementations, and ad hoc legacy tools such as spreadsheets and slides.