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When you enter a new product area for the first time, you are faced with many decisions. For example, you might be wondering whether to take a traditional approach to business or go with a lean startup. You need to decide when it’s time for prototyping and beta testing.
With all this product development or product development, it’s easy to forget that every product has a defined product life. If everything goes well, it goes through the four main phases of the product life cycle.
Do you feel hazy in the product life cycle? Read on for some tips to help you understand.
The product launch phase isn’t the same for every company, but it’s when you release your first version of the product. Traditional companies usually do this after a full product development cycle with extensive testing and focus groups.
With lean startups, this happens during the development phase. These companies go to market with a product with minimal viability and refine it based on customer feedback.
In both cases, however, the company hopes the product will gain traction among early adopters.
In the growth phase, early adopters give way to mainstream customers, who now find the product attractive. Typically, you will see large spikes in orders, circulation, sales, and profitability.
This phase also brings some other benefits. By increasing total sales, you can usually better leverage economies of scale to increase profit per product sold. Typically, you can also implement experience-based efficiency improvements.
The maturity phase usually means that you have stable market share, but it also means that most of your ideal customers already own the product. You are facing increasing competition from competitors offering comparable products and imitations.
Essentially, you see the beginning of the end. Most companies look to new markets, improvements, and alternative uses for their product to keep it profitable a little longer.
The saturation stage occurs when most of the people who are likely to buy your product at current price already own it. This phase can also occur when an innovative new product makes your product irrelevant. Think of CDs that replace tapes, then MP3 players that move CDs.
With ruthless cost-cutting measures in production, you can stay in the market. Many companies stop production or sell their associated assets. If you want to get a deeper insight into the product lifecycle, you can find out more here.
Product life and your business
Knowing where your product is in the entire product lifecycle enables you to make informed decisions.
If you are in the growth phase, there is logic to infrastructure investments. After all, you can maximize profits by improving your production process. As you near the end of the maturity phase, it makes more sense to find someone who is looking to buy out your business.
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