What is the product life cycle?
The Product Life Cycle is a term used to describe the process of product development, from start to finish. In other words, The product life cycle is the trip that each product takes from the conception of an idea to its eventual retirement, referred to as the product life cycle.
The notion of the product life cycle is currently at the same level that the Copernican understanding of the cosmos was 300 years ago: many people were aware of it, but few seemed to apply it efficiently or productively.
Introducing a new product to the market is filled with unknowns, uncertainties, and often unforeseeable hazards. The demand must be “generated” during the first market development stage. The product’s complexity determines the length of time it takes, degree of novelty, fit into customer wants, and the existence of competing replacements in one form or another. A proven cancer cure would require almost minimal market development and would receive immediate widespread acceptance. A supposedly improved substitute for the lost-wax technique of sculpture casting would take much longer.
5 Phases of the Product Life Cycle
It is generally agreed upon that a product’s life cycle is broken down into five phases. These are as follows:
Why to use Product Life Cycle
It is critical to conceptualize a product life cycle since, at each stage, a product is confronted with various problems, risks, and possibilities. To meet challenges, mitigate risks, and seize opportunities, it is necessary to make relevant strategic decisions at various points in time throughout the organization. Marketing, pricing, distribution, sales, product support, and feature development are just a few examples of the decisions that you must make.
If a product is transitioning from one lifecycle phase to another, there is no set timeframe for when it will complete the transition. The time a product spends in each stage and the total length of the product life cycle will vary greatly depending on the product and the industry in which it is used.
There are distinct characteristics that distinguish each phase
No matter how simple, every product will require some level of development to reach a launchable minimum viable product (MVP). This initial stage of development can be challenging because it necessitates the expenditure of resources without generating any revenue. If you already have a successful business, this will include reinvesting profits from other profitable goods to offset the costs of starting from scratch again. Another option is that this is often the point when entrepreneurs assume the majority of the investment risk on their shoulders, either by working without compensation or with minimal resources.
The development stage is commonly referred to as the “valley of death” because it is during this period that products attempt to cross the gap between development and commercialization.
As a result of introducing your MVP (minimum viable product) to the market for testing and iteration, the introduction phase of the product life cycle begins. In this volatile period, many essential components will be defined, including, for example, the following:
What is the best way to position the product from a branding, pricing, and viewpoint standpoint? Which of your messaging hooks is most effective with your target audience?
When it comes to marketing channels, which ones provide the best return on investment?
While you may be making some income during the introduction phase, profitability is likely to be a long way off at this point in the process.
Before reaching the growth phase of the product life cycle, the product will have demonstrated product-market fit and widespread adoption and traction among users. Your primary focus will now be on expanding market share, and you can begin to think about how to make your business successful.
The nature of your market will most likely determine price points at this point. If you have a product with a limited number of competitors, you may decide to launch it at a higher price point.
Alternatively, far more typical, you may decide to forego profitability to increase customer acquisition and brand exposure. Early adopters will typically benefit from drastically discounted prices and other promotional activities made available to them. During the expansion phase, you are likely to spend substantial money on marketing to reach as many people as possible.
It is regarded that a product has attained maturity when the rate of expansion and rapid early acquisition has begun to plateau.
During this phase, your primary objective will be to shift away from gaining new customers and instead emphasize client retention as a core statistic. It’s usually good news when your company invests more significantly in these mechanisms.
However, you might find that customers’ success mechanisms, such as support teams, online account areas, and any other components that may affect how ‘delightful’ your products are to use, will most certainly take precedence over sales and marketing. Additionally, you may consider developing extra items or services to increase profits from existing consumers throughout this period.
All great things must come to an end, and when this occurs in the context of a product, we refer to this as the ‘decline phase,’ which is the final step of the product development lifecycle. While you’re in this phase, competition is fierce, consumer wants are likely to be much different from when you first introduced the product, and sales are virtually indeed on the decline.
Whether to terminate (sunset) the product, sell it, or try to breathe new life into it by investing in new feature development are all decisions that the company must make.
Advantages of using a product lifecycle model
The most significant advantage of the product life cycle model is that it enables management to select which strategies to employ at any given time. Ultimately, the goal is to increase the time a product is profitable during its lifecycle.
How to use the Product Life Cycle
Of course, the success of every product will ebb and flow. To steady the ship you can use advertising to raise market recognition and bring in new business opportunities. Another option is to reduce the price to become more accessible to a more significant number of customers or add additional characteristics to become more applicable or appealing.
Product lifecycle models face several difficulties. Natural products are never the same as one another, and no effect will follow a “standard trajectory” through its life cycle.
As a result, when teams feel that they can utilize the product lifestyle model as a blueprint for the techniques to deploy at various times, they may encounter difficulties.
Consider the following scenarios: you may decide that it is more strategic to extend the growth stage to maximize market share to support a new feature release or that it is more strategic to develop the mature set to fund the development of a new product.
There is no reason why a product must go through all five stages to be considered complete. As a result of an unforeseen shift in the market, many items may transition from being in growth to decline.
Other products may defy the general trend of this model. Tech products, in particular, have the potential to grow exponentially in a short period. Still, they do not achieve profitability until they are well into the maturity phase of their development.
Millions of dollars could be invested in an app that obtains significant traction. The business could still lose money when the traditional lifecycle model expects a profit to be realized.