Have you ever wandered how the product is developed and what are the secrets behind managing a product development?
In this article, you will find out what are the four stages of the product lifecycle.
Think about a product as anything that you could consume or use. It can be electronics, food, clothes, airplane, software application like MacOS, or even recommendation system used in many sites and so on. We use products to satisfy some sort of needs or wants by achieving a task. This could be the need to connect with others, to eat something delicious, to elevate our status, think about Louis Vuitton handbag as one option and there are many more examples.
Since products surround us, we rarely think about what is happening with them. We usually notice a new model being introduced every year or more frequently. But why is that?
The product appeal, unique market proposition and sales are some of the metrics that drive the decision making of when a new version of the product will be introduced.
The stages are sequential and go from Introduction of the product and end up in the product’s decline.
Now you will learn more about each stage.
Once the product manager or the company identifies there is a market fit and a need for this product, they would work on it and, once it is ready; they would introduce it to the market. Usually such product have an unique fit or provide a specific feature or features that give them an edge over the competitors. Because if the company introduces a very similar product as their competitor, lacking any market differentiation, then there is no way to generate revenue and it will become a failed product. One example was Microsoft Zune vs the Apple iPod.
If the product is really new, then in this phase the companies will attract only a few percentages of the total market, the so called early adopters. In this phase, it is important to have a clear communication with your fans and supporters and ensure they will spread the word about your product.
Some characteristics when a company introduces a product in a completely new segment are that it has little or no competition. It will attract the early adopters as written above they are a small percentage of the total market and sometimes the product could even lose money, which is the case of the Sony PS5 when it was first introduced.
Growth is the second phase. In this phase, the sales rise and the company who introduces the product sees a big adoption. The amount of competitors is still low and there is still big technological advantage in favor of the company which introduced the product first. In this phase, the company could decide to improve the product further to keep the edge.
Think about Tesla, which is still way ahead of the competitors with their self-driving cars.
Some smartphone companies try to stay in this phase by constantly introducing new flagship killers or features.
The sales is at its peak at this stage, but there are also bad things for the company. More and more competitors enter the market and try to get a piece of the “pie”. The company who first introduced the product might find it difficult to compete with other competitors. Think about the laptop market segment and IBM, which eventually sold its laptop division to Lenovo.
The competition is fierce and sales drop significantly. The market considers the product as a commodity. There are plenty of options and alternatives. The company should start investing in research and development and move to a different market segment or introduce/solve better problems for their audience.
The model of the 4 stages of product development is an important frame of reference you could use when thinking about your product, solution, or service. Things rarely stay the same for a long time and if you are good in your market niche and there is a lot to be earned and expand, you could expect competitors.
Knowing where you are will help you plan your next step and be always on the wave of growth.