Why should you manage your product lifecycle?
Every stage in the product lifecycle demands different approaches to handle feature development, marketing activities, and sales channels. Like in relationships, timing plays a very important role in product development. Creating awareness during the maturity phase or skimping on marketing spending during the introduction phase is rarely a good idea.
What are the stages in a product lifecycle?
There are different versions of the product lifecycle, some more elaborate than others. Broadly speaking, there are four basic stages for any product: Introduction, Growth, Maturity, and Decline.
This phase is a very exciting one for any product. It's a well-known statistic that almost 95% of new products fail, so this is also a make or break phase. After months of development, market research and beta testing, this is the first time the product is unveiled to the outside world. If you're developing a brand-new product, there are many more factors to consider. The product should resonate with your customers and be able to solve a tangible problem. Even if you get these right, your product could be too far ahead of its time.
When P&G first came out with an odor eliminator, they couldn't get users to try it, despite being an effective and useful product. They realized that this was because people got accustomed to smells, even overpoweringly unpleasant ones, so much so that simply eliminating the original scent didn't seem to be any cleaner to the consumer. Instead, P&G changed tactics and added new scents to their product that the consumer could associate with cleanliness after which sales started picking up. This is the story of the American brand 'Febreze', sold under the name 'Ambi pur' in non-English speaking countries.
This phase is typically an expensive one and rarely profitable. A great deal of resources are invested in creating awareness, gathering customer usage data, and trying out new marketing and sales channels. The primary goal is to make people aware of your solution if it's a new market, or to get them to consider your brand if it's an established market. Ideally, you must have locked in your positioning, user personas, and pricing strategy by the time you enter the Introduction phase.
There are two ways you can go about picking a price strategy. Your choice depends heavily on your industry and target demographic.
Skim the cream
Starting with a high price point is feasible when your product has a definite edge over existing solutions, or if you have patent protection.
Rapid market penetration
A lower price point encourages user adoption, and is advantageous if your market has established players, but it takes longer for your product to become profitable.
This is a crucial phase for any product. There is a gradual increase in sales and an increased market presence. Introduced in 2010, the Instant Pot electric pressure cooker wasn't instantly popular. Social media influencers and word-of-mouth soon brought about an explosive popularity for this product, which went on to become the single largest selling item on Amazon in 2017.
The product team works on new features as marketers work on getting existing customers to try them. Marketing campaigns also start to focus on differentiating the brand from competitors. Presence of competitors can straitjacket some of your decisions, like price level or marketing and sales channels. On the bright side, your competitors' campaigns can also increase product demand, thereby allowing you to focus solely on differentiating your value proposition from the rest.
At this point of time, learnings and insights from your customer data (feature usage, customer feedback, chat transcripts and one-on-one interviews) should start to influence your marketing copy, sales campaigns, and prioritization of product features. This phase of the product lifecycle is also marked by expanding sales teams to handle increasing numbers and to penetrate new markets.
In this phase, the growth of a product stabilizes or starts to taper off. In other words, the product has peaked. If your market is saturated (i.e, if most of your target audience either owns or uses the product), then your product is now mature. New revenue typically comes from people replacing the product instead of first-time users. This also means that every new customer you win is one you've stolen from your competitors.
A good example of a product in its maturity phase is the television cable connection. Most of our parents' houses definitely have one. If you're a young working adult who's moved out of on their own, you most likely haven't got one. With OTT platforms and social media, the demand for traditional cable is tapering off with the younger crowd.
Brand image can be a game-changer for your product during this phase. Differentiating your USP from your competitors becomes more difficult with an onslaught of new players in your market. At this point in your product lifecycle, you could have competitors on both sides of the price spectrum—cheaper versions with a limited or similar feature set, and premium, high-end versions of your product. Here's where branding can help you retain your market share in the face of increased competition. A unique brand identity can help you lengthen your maturity period and stall your product's decline.
Every product eventually gets to this stage. Along with sales and profits, market share and relevance start to decline. Marketing efforts are minimal, and prices are slashed in order to retain customers. At this point, depending on your industry, you have several options.
- Discontinue it - Products that have become obsolete and been discontinued, such as typewriters and telegrams.
- Continue offering it to existing users - Many SaaS applications continue servicing their customers without taking on new ones.
- Target a niche market - Vinyl records have found a new profitable niche with record labels. Being a premium commodity now, revenues from vinyl records almost rival revenues from digital downloads.
- Reboot it as something else - Listerine was initially used as a surgical antiseptic, floor cleaner and a cure for gonorrhea. The product enjoyed commercial success only after it was rebranded as a cure for bad breath.
To sum up
A product lifecycle is a rough guide that helps you map out your product's journey. Understanding your product's lifecycle can help you shorten the expensive introductory period, capitalize on your growth phase, and draw out your maturity phase until your product's decline. Building a product can be exciting, scary, and rewarding in equal parts.
The product lifecycle equips you with tools that help you handle the curve balls along the way.