Understanding the Product Life Cycle

What is the Product Life Cycle?

The product life cycle consists of 4 stages. The clock starts ticking once a product enters the market for the first time till when it ultimately is phased out of the market. Tracking sales, investment costs, profit, and competition can help determine the stage of your product.

For example, look at the evolution of the Apple iPod. Yes, it is still alive! The iPod was first introduced into the market as a product with no touch-screen and no extra application offerings. Then, as time went on and consumer tastes, along with innovation, evolved as well as competition flooded the market Apple invested in further product development to keep up. Apple’s iPod evolved with the addition of a touch-screen as well as adding to the overall usability of the product. But, as with all products, Apple’s iPod is a declining segment of the company. Steve Jobs said it best, “the iPhone was the best iPod we’ve ever made”.

What Happens at Each Stage of the Product Life Cycle?

There are 4 stages to the product life cycle; introduction, growth, maturity, and decline. Let’s dive in further to see what these stages mean for products and their evolution over time.

The introduction stage is exactly as it sounds. This is the first time a product is entering the market in the form of a minimum viable product (MVP). It is crucial to gather as much data as possible in this stage as it will help in guiding your product roadmap. Users will be interacting with the product for the first time and giving important feedback. In this stage expenses can be quite high, depending on the product and industry, due to the product development and operations spend that occurs. Also, you may find that competition is quite low at this stage. Especially if you are in a new or niche market.

Congrats! You moved forward to the growth stage. What can you expect in this phase of the product? In the growth stage your product has found PMF or product market fit. This means users are adopting your product at an increasing rate as they find the AHA moment faster and faster with usage. This is allowing product sales to increase and ROI beginning to formulate. Taking the data that you gathered in the introductory phase, you will also begin to find the most efficient price point for your product. This will be dependent on demand as well as if competition begins to heat up. Company growth is great, but it also means more and more eye-balls are coming across your growing product.

Growth is an exciting stage of a product. It can be a time where you experience “hockey-stick” growth and maybe use some extra capital to buy an office kombucha tap 😉. But, maturity is reached with every product. This is a crucial stage as it can really make or break your company. It is a stage where innovation is needed to keep moving forward and beat-out increasing competition. How do you know you have reached maturity? At this stage growth will begin plateauing. Revenue will slow and margins will tighten as competition heats up in the space. Marketing tactics will typically be targeted at keeping the current market share or reaching potential new segments that look opportunistic. Additionally, products that lacked consistent traction in the market will be put to rest. Companies in this stage will need to evolve their offerings with innovation by looking at the current and projected market trends to begin preparing for the future.

After the maturity stage, products can find themselves at the decline stage. It is important to note that not every product needs to go through a decline. Companies can innovate their product to expand their offering and relate to different user tastes that are being experienced in the market. But, if this does not occur you will see sales decrease significantly and may even see an entire product department shut down at the company. You can learn more about this in our "why digital transformations fail" blog post. Innovation is vital to company survival as you must adapt to the different user tastes that are flooding the market. If you are able to pivot and innovate when needed, your company's chances of survival increase significantly.

There you have it. The 4 stages of the product life cycle! Innovation is crucial to company survival. Products will always arrive at a stage where growth may be plateauing and further product developments are needed to stay alive. Codelitt enjoys helping companies create and build new things. We are obsessed with the problem and using innovation to make products easier for the end-user. If you have a project or idea in mind we’d love to hear from you! Contact us here.