The product life cycle is a key part of understanding the development of your product.
Keep on 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?
Product life cycle, as the name indicates, is the lifespan of a product from the time it is launched until it is withdrawn from the market.
Consider the example of CD players. Their sales decreased significantly in the mid-2000s. Though CD players are no longer manufactured, they can still be used for another decade.
The point is, this serves as a good example of a product whose life cycle has reached its endpoint.
When a product is launched in the market, it is often not in the common knowledge of the customer. Its life cycle begins from new and useful to shifting towards regular updates. It finally retires from its market circulation at a certain point.
The retirement of the product depends on various factors such as decreased sales, higher competition, lesser demand, and saturation.
The product life cycle is continuous in nature. Companies usually rely on product life cycle analysis to understand market demands. They implement strategies to increase their product’s lifespan in the market.
Keep reading to find out 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 the management of all manufacturing processes. Moreover, it helps the organization deal with increasing complexity and engineering tasks to compete in the global market.
Remember to not confuse Product Lifecycle Management (PLM) with Product Lifecycle Management Marketing (PLCM). The former is concerned with the engineering factor of the product while 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 to the table.
When you go through these stages or think about developing your product, remember that there are differences in understanding how long a product will remain in a particular stage of the product life cycle.
Stage 1: Development
This is the stage where the cost of production keeps on rising while there is no revenue generated.
Some products require years of research and tons of capital investment while others are quicker to develop and launch in the market.
In this stage, the risk is very high which is why funding is limited.
Thus, the strategy that many companies use is to direct the revenue generated from their current products towards investing in another startup.
In other cases, the entrepreneur uses their personal resources or savings to start their business.
Stage 2: Introduction
This is the stage where 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. It becomes crucial to reach out to potential clients and customers.
Stage 3: Growth
At this stage, the product has been welcomed by customers.
Your business is competing to increase its market share because other companies are aware of your product and its place in the market.
If there are a lot of competitors, the price of your product is likely to be low. However, if your product is innovative with lesser competition, the prices of your product may remain high for a longer period of time.
This stage increases the product demand as well as the profits while aiming at an expanded target audience. The growth stage also aims to improve the product’s features and functions.
Stage 4: Maturity
This stage is where your sales will slow down or in some cases even stop.
This is the result of increased competition for the maintenance of your market share and saturation. The less successful competitors are thrown out of the market, which is also called the ‘shake-off point.’
Companies are likely to alter or develop a new product to cater to different consumer needs. Innovation is strategically used 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. Additional funding is not required at this stage.
Stage 5: Decline
This stage is associated with a decline in revenue which could be a result of several factors such as market saturation, increased competition, decreased demand, technological evolution, or changing user needs.
Here are a few options that businesses have at this stage – they can discontinue the product.
They can tap into new markets by targeting new audiences, 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 that is launched as ‘new and improved’, consider it has passed through the decline stage.
What Are Product Life Cycle Examples?
To help you understand the product life cycle better, the following are examples that 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 stronger competitors.
Hence, the revenues and demand for typewriters eventually declined, marking their 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 that motor companies like Tesla have brought to the table signals its growth stage.
Artificial Intelligence Products
Artificial intelligence (AI) products are constantly pushing the boundaries of invention.
Though they have been in development for a long time, they’re still in their introduction stage. This is because they are still being tested on and are not fully adopted in markets.
How Is the Product Life Cycle Calculated?
The product life cycle is calculated through product life cycle analysis. Conducting product life cycle analysis helps us understand if the product is catering to the needs of the target audience. If not, then the focus can be shifted and scope creep can be identified.
It is also crucial to analyze the product in connection with the market as a whole. This helps determine the competitors, sales, expenses, and how the longevity of the product can be increased.
This analysis identifies at which stage of the product life cycle is the product in. This, in turn, helps the company strategize what needs to be done to continue generating target numbers of sales.
It is relevant to the products that are in their maturity or decline stages.
Why Is the Product Life Cycle Important?
The product life cycle is helpful for managers, developers, as well as designers.
By identifying what life cycle stage the product is in, it offers enough insights that increase the longevity of that stage and implement 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 is able to 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 a set of strategies can be implemented.
Decision Making: The product life cycle can help the company make crucial decisions related to product development, upgrades, improvement, and additional features.
Target Audience: The product life cycle helps target the right audience and identifies if the product is actually meeting their needs. In case of decreased sales, the focus-reshifting of the target population can also be determined.
The product life cycle is another tool for making a customer-centric product. Use it to achieve your product goals today.