Product Life Cycle
Product life cycle stages
When developing a new product, there are four phases related to a product’s life cycle, namely;
This is certainly the case for established businesses, however, for startups there are a few more;
- The Idea
- Market Validation
- Creating a Minimum Viable Product (MVP)
- Gaining market feedback
- Modification of the product or service
In other words, there is a lot to do before ‘Introducing’ your product or service to the broader market. Let’s have a look at each Phase and see what it means for your business.
data-contrast=”auto”>Where ideas originate from and how to find them has been described in the article ‘How to come up with a business idea’ and is obviously the first step for a startup’s new product or service.
The entry of your product/service into the market needs to be validated by completing industry trials. You also need to finalise your target market, pricing model and market entry strategy.
- Have you completed trials to confirm the strength of both the product and the market?
- Have you identified your target market and worked out your market entry strategy?
- Do you have a well-developed pricing strategy/model that is ready to go?
- Do you understand the distribution channels needed to achieve market entry?
- Can you recognise the ‘influencers’ in the market that will assist your market entry?
Creating a Minimum Viable Product (MVP)
A Minimum Viable Product or MVP is a development technique in which a new product is introduced to a limited market with basic features, but enough to get the attention of the consumers.
Your MVP is the most basic version of the product which the company wants to launch in the market to gauge the response from prospective consumers or buyers.
The MVP concept allows you to understand where the product is lacking and/or what are its’ strengths and weaknesses.
Gaining market feedback
Talking with customers, and users of your MVP is critical because you will gain important insights into what needs to be modified in order to have a successful full featured product launch..
Modification of the product or service
The MVP process may need to be repeated before the final design meets everyone’s’ needs and expectations
Introduction stage of the product life cycle
The Introduction stage of the product life cycle can be expensive when launching a new product as the size of the market for the product may be small, and sales low.
The cost of research and development, consumer testing, marketing and advertising needed to launch the product can be high, with low initial revenue to cover costs.
The growth stage is characterised by a strong growth in sales and profits, and because the company can start to benefit from economies of scale in production, the profit margins, as well as the overall amount of profit, will increase.
Increased revenue and higher profits make it easier for companies to launch the product into other regions and countries; making it possible to invest more money in promotional activity and maximise sales potential.
The product is established and the aim for the manufacturer is now to maintain the market share. If the product was the first of its kind or has unique features you may find that competitors are catching up and introducing alternatives.
You may consider modifying the product and adding new features to maintain a market edge. At this stage price competition becomes an issue as competitors introduce lower cost options.
All things that go up, must come down. When the Product life cycle declines, what should you do at this point?
For many products, but not necessarily all, the market may shrink, and demand diminish, and this is what’s known as the decline stage.
This shrinkage could be due to the market becoming saturated (i.e. all the customers who will buy the product have already purchased it), or because the consumers are switching to a newer or different type of product.
At this point, preferably earlier, serious thought should go into cost reductions in the manufacturing or delivery process.
To achieve this, it is wise to implement what is known as a LEAN (please expand on the acronym.) approach where every step in the process is continually reexamined to look for potential improvements.
LEAN has an important message ‘If part of the process does not benefit the product or service and it does not benefit the user (customer) it should be discarded’.