Definition: The product life cycle model breaks down the various stages of a product’s evolution, from its debut to its retirement. Each phase comes with its own characteristics, demands, and challenges.
What is the product life cycle?
All products travel through various stages during their existence, and the product life cycle breaks these down into specific phases with distinct characteristics. Although there are many versions and variants, the typical product life cycle consists of the following four periods:
Awareness of which stage a product currently occupies is essential, as this phase should dictate many approaches to the management, sales, marketing, and support of the product, from positioning and pricing to feature development and prioritization.
Each phase of product life cycle explained
Every product starts at zero, reaches its zenith, and eventually declines, if not completely ceasing to exist. Progressing along this curve may take months, years or decades, but no product can escape it completely.
Life Cycle Phase 1: Introduction
A product is in the introduction phase from the debut of its MVP until it starts to gain traction in the market. This is a highly experimental stage as companies are trying to figure out which value propositions, messaging and price points connect with different target audiences. Branding is defined, distribution channels are identified and promotion is emphasized. It’s also a very expensive and risky stage, since revenue is scarce and profits aren’t even part of the conversation.
Life Cycle Phase 2: Growth
A product transitions into the growth phase once it achieves product-market fit. At this point the focus is on rapidly growing the user base with a focus on customer acquisition and rounding out the feature set to have a complete offering. Lots of resources may be expended on marketing and sales tactics to maximize reach and awareness. This is also where most products shift into some level of profitability, although some well-financed firms may delay healthy margins in favor or doubling down on growth and capturing market share.
Life Cycle Phase 3: Maturity
As growth slows down, products reach their third phase: maturity. The emphasis begins shifting from customer acquisition to retention since the pool of potential new users is overshadowed by those already using the products. Account management and customer service are of particular importance during this phase, while product development focuses on scalability and extending the product into complimentary/ancillary domains to maintain usage. Keeping up with competitors and developing profitable processes occupy much of the company’s time during this period.
Life Cycle Phase 4: Decline
The final phase of the product life cycle is decline. During this period usage drops off as product demand ebbs. This may be due to the driving motivation for the product fading from importance in the market (and thus a smaller overall market for the product) or a replacement product/technology encroaching and stealing market share. Although some products manage to hold on for quite some time in this phase and survive on acceptable profit margins, many are eventually “sunset” and retired.
What is a product manager’s role in each phase?
As a product moves through its life cycle, the daily job description for a product manager also evolves as they work to shepherd the product along.
During the introduction life cycle phase, a product manager taps into their creativity as they attempt to converge on product-market fit. Starting with MVPs and measuring their reception, this stage includes experimenting with various messages, price points and feature combinations to see what resonates with the target audience.
As usage increases, product managers can dive into the data and try isolating which KPIs are most important for “stickiness” and then testing to see which levers can fuel adoption and retention. Persona definition is another key task during this phase as product teams begin to understand who is using their product and why.
When a product shifts into the growth life cycle stage, the product manager must establish themselves as the subject matter expert on the product and educate the rest of the company on how it works, who’s using it and how to position and discuss its capabilities. Meanwhile, the market itself is now aware of the product category and the challenge shifts from building awareness to steering that demand toward a particular solution.
Prioritizing and roadmapping are important, as new features and enhancements are built with the express intention of adding users beyond the initial trove of early adopters, while also ensuring the product can scale well with the influx of additional customers.
Product managers can’t get lazy with set-and-forget pricing, either. Active monitoring of the overall marketplace is required to ensure growth rates continue and remain competitive as new players enter the market while still maintaining healthy margins.
Now that the product is all grown up, product managers are tasked with extending the ride for as long as possible. This means reducing the cost of goods sold while beating back competitors anxious to steal away the current customer base.
Automation and streamlining processes are key to these efforts, as resources are no longer as plentiful while time-consuming, labor-intensive tasks can gobble up profits. When it comes to prioritizing items for the roadmap, the focus is on continued differentiation and satisfying outstanding customer demands that, if unaddressed, could jeopardize retention.
Additionally, product managers will spend more time evaluating user behavior to identify problematic indicators and devise strategies to head off waning usage before customers call it quits.
When the end of the life cycle, product managers have a few options for squeezing more life out of their products. They can attempt to combat churn with discounted pricing, targeting new, additional markets and attempting to win back former customers, delaying significant shrinkage as long as possible.
Additionally, there is sometimes an opportunity for a late-stage pivot to leverage the existing solution for a new problem scenario, finding a new application for the technology and expertise the company has amassed.
Finally, there is the painful but necessary process of sunsetting a product. This includes finding a soft landing for the remaining customers, selling off assets and dealing with customer data exports and helping them transition to alternative solutions.
Everything in this world has a beginning, middle and end—no product goes on forever. But product management plays an integral role in how quickly each product moves through its own life cycle stages.
Proper management can spell the difference between a quickly fading fad and decades of profitable relevance. Knowing which phase the product is in and planning accordingly ensures every opportunity reaches its maximum potential.