Let’s talk about product life cycle

So, what comes to mind when you hear the term product? The simplest definition I’ve come across is: “Any item or service you sell to serve a customer’s need or want.” A product could be anything physical, like a pen, or virtual, like software. Well, we also have hybrids, for instance, digital appliances like a smartwatch.

Naturally, there exist different variations of product definition depending on the context. In this article, we’ll focus on products in the software engineering context.

In Software development, a product is a set of features or capabilities that provide a certain value to a specific set of users. For instance, Microsoft Office allows its users to edit files in different formats. All products have four main components: the problem, the solution, the target audience, and the product itself. Each of these components is key to the success of any product throughout its lifespan. People have different needs, so having a one-for-all product is close to impossible. Also, the geographic and socioeconomic disparities render different problems among people, and the solutions for solving these problems will certainly differ, depending on different factors. In essence, a successful product offers real, consistent value to its users.

What is the Product Life Cycle?

Product Life Cycle or PLC refers to the period between the conception of a product and its discontinuation or removal from the market. Within this period, a product goes through 5 main stages: Development, Introduction, Growth, Maturity, and Decline.

Development

The development phase is critical because it’s bound with several uncertainties, risks, and other unknowns. The success of this phase depends on how well you engage the product stakeholders, which includes the users and the internal team members.

Some of the activities in this phase are market and technical research, competitor analysis, prototyping, and building the product. These activities will help you to create a business case that validates the continuity of your product. They’ll also help in aligning what needs to be done and by whom, what can be done, the focus areas, and expected outcomes.

Introduction

Once the product has been developed, it’s released into the market for the first time. The goal in this stage is to create awareness and gain market demand for the product. In this stage, there’s usually a considerable amount of effort and capital that goes into promoting the product into the market and getting it into the hands of the users.

There’s also little to no competition within this phase, as competitors are also getting access to the product for the first time. The amount of time spent here normally depends on a few things: the nature of the product, the popularity of the company, and the size of the target audience.

Growth

This is the third phase in the PLC. As the product gains traction, the demand rises, and customers start buying the product. The goal in this stage is to increase sales and grow the customer base. At this point, a lot of costs go into financing sales efforts and advertising campaigns to ensure you reach a high population of the target audience and to distinguish your product from similar existing products.

As the competitors learn of the product, you may also experience rivalry, which may force you to reduce your prices and experience low-profit margins.

Maturity

The fourth stage in the PLC is Maturity. At this stage, the product is most profitable, and sales have begun to stabilize. Competition is at its highest at this stage, as rival companies have had enough time to introduce improved products to the market. To survive in this stage, companies must focus on innovation and find new ways of introducing new features or other products to the market.

Decline

This is the last phase of the PLC. It is depicted by a significant decrease in the demand for your product as prices and margins get depressed. Marketing efforts are also reduced and targeted to identified loyal customers. Between the Maturity and the Decline phase, many companies restart a new Product Life Cycle process based on the innovations in the maturity stage. This is called Product Extension, and it helps the companies to stay in business.

Conclusion

Understanding the stage in which a product is at any given point is important for decision-making in all businesses. It helps decision-makers to anticipate the product’s direction and plan better. For instance, marketing strategies are different for all stages. Knowing the product’s stage in the PLC will help you to apply the right marketing strategy and always stay in the business.