Product Lifecycle: Lifespan of a Product
Prodsense: Given we went briefly over the process of building a product, can we talk about the lifespan of a Product?
Yes! That’s the plan buddy.
But let’s start with calling this process Product Lifecycle instead of using the word lifespan or stages. These stages put together would end up shaping the lifecycle of a product. It includes the time from product launch until its withdrawal from the market (if in case it's withdrawn).
Prodsense: Got it. So how many stages are there in a Product Lifecycle? Are there any specific things a Product Manager should focus on each of these stages?
While different resources would have their own version of different stages in the Product Lifecycle, we’d focus on how Monica Dhiman at the LogRocket talks about 5 such stages.
The infographic below gives a snapshot of these stages along with the tentative focus points for a Product Manager for the respective stage their product is in.
Prodsense: Oh this is nice. How about we deep dive into each of these stages now? Starting with the first one.
Yes! Let’s start with the first one.
Product Life Cycle Phase 1: Development Stage
A successful development stage balances the need to make informed decisions and the need to build something that generates revenue.
The development stage of the product life cycle is the research phase before a product is introduced to the marketplace. This is when companies bring in investors, develop prototypes, test product effectiveness, and strategize their launch. The goal is to build the right product to attract early adopters. At each stage of the product development process, product managers ensure the team’s decisions revolve around the customer’s pain points. In this stage, companies typically spend a lot of money without bringing in any revenue because the product isn't being sold yet.
Let’s break down the product development stage even further and explore the role of a product manager at each step:
Idea generation and screening: The product manager collaborates with the team to brainstorm and evaluate potential solutions to address user pain points. They survey available ideas and make informed decisions on which features to prioritize and build.
Design and discovery: The product manager defines user personas, conducts market research, and analyzes competitor products. They work closely with designers to shape the user journey and create a seamless and exceptional user experience.
Development and testing: The product manager works with the development team to ensure a clear understanding of the selected features and to address any questions or uncertainties. They collaborate with the QA team to verify that implemented features provide value to the user and meet quality standards.
Product launch: Together with the product marketing manager, the product manager aims to generate excitement and anticipation in the market before the product launch. They develop effective marketing strategies, messaging, and promotional activities to create awareness and generate interest among the target audience.
But before the launch, the product manager might consider looking at the following:
Market size: Understanding the potential target market size helps set expectations and guide strategies for market penetration upon launch.
Potential sign-ups: Tracking the number of sign-ups for a website or MVP provides insight into user interest and can indicate the potential success of the product.
Social media engagement: Monitoring engagement on social media platforms helps gauge users' ongoing interest and excitement for the product, which can be a good indicator of its potential reception in the market.
Product development: The product manager should ensure that the development progress aligns with user needs and expectations, ensuring that features are being tailored accordingly and delivered in a timely manner.
Prodsense: Got it. So now that we have clarity on the research part of the development process, let’s get into building the product?
Yes sir! That’s exactly where our second stage takes us.
Product Life Cycle Phase 2: Introduction Stage
During the introduction stage, you’re trying to get to product-market fit.
Every product has its origin story, whether it's a spinoff, brand extension, or a revolutionary creation from a startup. Regardless of its background, a new product encounters a unique set of challenges that demand the attention of its product manager. The introduction phase, which marks the launch of the product, is distinct from the prior research, design, and development stages. During this phase, the focus shifts away from immediate profitability and towards specialized, costly activities like advertising, sales, and distribution.
This phase can be compared to the takeoff of an airplane, which is one of the riskiest moments in air travel, second only to landing. Similarly, a successful product launch is crucial for the overall success of a new product. The initial customers, often early adopters, seek to possess something exclusive and novel: your brand-new product. They are typically willing to tolerate minor flaws as long as the core concept of the product is solid.
Therefore, the introduction phase requires meticulous attention to detail and effective execution, as it sets the trajectory for the product's journey in the market. By carefully navigating this critical phase, product managers can lay a strong foundation for long-term success.
Prodsense: Can you talk more about this? What exactly would the Product Manager do in this stage?
The Product Manager’s responsibilities or their key focus areas in the Introduction Phase would be as follows:
Positioning the product from a brand and pricing perspective: This involves defining the unique value proposition of the product, understanding the target market's needs and preferences, and determining the most appropriate pricing strategy that aligns with the product's value and market positioning.
Identifying messages that resonate with the target audience: Through market research and customer insights, you should identify the key messages and value propositions that resonate with your target audience. This includes understanding their pain points, aspirations, and motivations to craft compelling messaging that effectively communicates the benefits of the product.
Identifying effective marketing channels: It's crucial to determine the most effective marketing channels to reach and engage with the target audience. This may involve a combination of online and offline channels such as social media, email marketing, content marketing, advertising, events, and partnerships. Evaluating the channels that have the highest potential for reaching and converting the target audience is essential for an effective marketing strategy.
Evaluating additional features for the product: You should carefully consider which additional features to include in the product based on customer feedback, market demand, and the product's overall value proposition. It's important to prioritize features that align with the product's core functionality and address the most significant pain points of the target audience. Avoid adding unnecessary features that may complicate the product or dilute its value.
Along with these focus areas, the product manager would measure the success of their product through some key product metrics or what we call KPIs (Key Performance Indicators). These would include:
Product activation rate: The ratio of users who have reached the activation point compared to the total number of sign-ups to gauge user engagement.
Feature adoption: Using Adoption rate, which is calculated by dividing the monthly active users of a specific feature by the total monthly logins, indicating the level of user satisfaction and value derived from the feature.
Customer acquisition cost: Dividing the total marketing and sales expenses by the number of customers acquired within a specific timeframe. The aim is to reduce this cost to acquire users efficiently.
Revenue: Tracking monthly and yearly revenue generated by the product, along with the revenue growth rate, to assess financial performance and business growth.
During this stage, the focus is on iterating and refining the pricing, product features, and messaging to achieve product-market fit. While revenue may be generated, profit might not be significant yet. So the PM’s role involves becoming an expert on the customer's problem and effectively communicating how your product solves it. They will collaborate closely with sales and marketing to explain the product's capabilities and reasons for customer adoption. If the product managers are addressing a novel problem or creating awareness about unrecognized needs, a significant effort will be dedicated to generating demand and highlighting the unique solution that the product offers.
It is crucial for the product team to be agile and responsive to customer feedback. This entails resolving customer problems, eliminating roadblocks, and highlighting the advantages that customers see. It is important to hone pricing tactics, taking into account the option of setting a higher price upfront when there are no rivals and lowering it later when competition arises. As an alternative, giving early adopters a discount on the purchase price might encourage them to try the product. As the product acquires popularity, tracking analytics becomes crucial for understanding user demographics, determining feature preferences, and guiding choices about the future roadmap.
Prodsense: Basically this is the 0 to 1 phase for the product. The product manager utilizes the learning from the research phase to actually build the product. So we go from 1 to 100 in the next phase then?
Yes! That’s exactly what the Product Manager would do. It’s all about increasing users here.
Let’s talk about this stage in detail.
Product Life Cycle Phase 3: Growth Stage
When your product has proven adoption and traction, you can consider it in the growth stage and you can focus on increasing market share.
A product enters the growth phase once it has been effectively launched and has survived. This is encouraging news since it shows that customers are interested in the product and willing to pay for it. At this point the Product Manager would also need to step up the marketing initiatives. The challenge in the growth stage is to balance marketing, pricing, new features, and scaling, while avoiding competitors. All this while, the PM is also addressing issues like supply constraints and infrastructure failures caused by high demand. The growth stage is also where the product starts to generate more substantial profit margins as the increased sales volume spreads development costs over a larger number of units.
Prodsense: Nothing is worse than having an amazing product with great demand and then failing to successfully meet that demand.
That’s really well put Prod!
And during the growth phase, a product manager’s responsibilities would include:
Accelerating market share: Implementing strategies to rapidly capture a larger portion of the market through initiatives such as introducing new features, executing effective advertising and marketing campaigns, driving adoption, and leveraging various distribution channels.
Balancing supply and demand: Ensuring that the product's demand does not significantly surpass its supply, taking measures to optimize production and distribution capabilities to meet the growing customer demand.
Monitoring competition and pricing: Keeping a close watch on competing products in the market, analyzing their features and pricing strategies, and making necessary adjustments to your own product's price to remain competitive while safeguarding profit margins.
In essence, the goal is to drive aggressive growth, maintain a healthy supply-demand balance, and strategically position the product to stay ahead of the competition.
Prodsense: And just like last time, are there any metrics that a PM needs to focus on?
Yes there are!
Some metrics to focus on during this stage include:
Revenue growth rate: Tracking the rate at which revenue is increasing over time. A declining growth rate may indicate the product reaching its maturity stage.
Expansion revenue: Generating additional revenue by upselling to existing users, leveraging the customer base to increase sales.
Referrals: Encouraging existing users to refer your product to others, utilizing word-of-mouth marketing and incentivizing referrals.
Customer satisfaction: Evaluating how satisfied users are with the product through regular feedback collection. Net Promoter Score (NPS) measures customer loyalty and happiness.
Stickiness: The ability of the product to retain users due to the value it provides. Calculated by dividing daily active users (DAU) by monthly active users (MAU). High stickiness indicates strong user engagement and retention.
Prodsense: Very interesting. But won’t the product growth eventually taper-off? I mean it can’t keep growing at an exponential rate till forever.
Exactly! That’s what takes the Product into the 4th Stage of its lifecycle. It is like an extension to the 1 to 100 journey for the product.
Product Life Cycle Phase 4: Maturity Stage
Your product enters the mature stage when growth and quick client acquisition start to level off. The focus of this stage shifts from growth to retention.
The maturity phase of the product life cycle begins with a slowdown in sales growth, reaching a stable or plateau stage. It is the longest phase for successful products, and many commonly used products are likely in this stage.
In this stage, the product marketing strategy focuses on differentiation from competitors. Product managers often reduce prices to maintain competitiveness and maximize sales. Market leaders may achieve peak profitability, while lower-ranked products face profit reductions due to pricing and competition.
To extend the maturity phase, a savvy product manager explores introducing product variants. However, introducing new variants poses the challenge of cannibalization, where sales of existing variants may be affected.While cannibalization may be unavoidable, an effective marketing strategy with proper differentiation can mitigate its impact. By targeting different market segments or exploring new markets, cannibalization can be reduced or even eliminated.
During this stage, prioritization becomes crucial since PMs want to keep the product's extra development effort to a minimum. They'll want to make sure that the features they offer keep the existing customers and provide the company with the chance to generate additional revenue from them.
As a product manager, during the maturity phase, they must:
Maximize profits by reducing costs: This will involve increasing the efficiency of your production, supply chain, and distribution operations.
Maximize the length of the maturity phase: By differentiating the product, adding new features, managing pricing, and keeping competitors at bay.
And yes Prod, before you ask, we track metrics here as well.
Measuring the maturity stage involves tracking key metrics to maintain achievements and explore opportunities for growth. Product managers should focus on the following metrics:
Churn rate: Churn rate refers to the rate at which users discontinue using the product, such as canceling a subscription. It is calculated by dividing the number of customers lost during a specific period by the number of customers acquired in the same period. The objective is to minimize churn and retain existing users.
Retention rate: Retention rate measures the percentage of users who continue using the product over a certain period. A higher retention rate indicates that users are satisfied and engaged with the product.
Churn rate and retention rate are interconnected. When retention rate is high, churn rate tends to be low. It is crucial to focus on maintaining a high retention rate, as it directly impacts reducing churn and fostering product maturity.
Prodsense: But what if the demand isn’t going up anymore? In fact it starts to fall?
That’s the final stage basically. A time when you aren’t able to extend the 4th stage anymore.
Product Life Cycle Phase 5: Decline Stage
The decline stage is where demand for your product has reached its peak and is starting to decline. You need to decide whether to pivot, revitalize or sunset the product.
Prodsense: Is there a reason as to why this might happen?
All products inevitably reach the decline phase of the product life cycle. There are multiple reasons for a declining product including:
Changes in technology
Lack of innovation
Market Saturation
Changing preferences of consumers
Planned obsolescence to ensure that customers buy newer models as replacements.
Substitution
The start of the decline phase is marked by a reduction in sales figures. There is often no way to alter the destiny of the product without dramatically altering the product’s features or market segment.
Prodsense: So how can Product Managers handle this? How can they make their product survive longer?
When faced with the decline phase of a product, there are several strategies that product managers can consider to address the situation and prolong the product's lifespan:
Product Diversification: Introduce variations or extensions to target new market segments.
Market Expansion: Identify and enter new markets or customer segments.
Product Improvement: Enhance the product based on customer feedback and market trends.
Cost Optimization: Reduce expenses without compromising product quality.
Strategic Partnerships: Collaborate with other companies to leverage resources and reach new markets.
Customer Retention and Loyalty Programs: Implement strategies to retain and engage existing customers.
Harvesting Strategy: Gradually reduce investments and focus on maximizing profitability.
Product Retirement: Manage the end-of-life process and transition customers to alternative products.
And that’s it!
That’s all we have on the different stages of the product lifecyle. Now that we have a really good idea on the process, we can finally talk about the captains of this ship next time - The Product Managers. Before we bid farewell, we are leaving you with a video that briefly explains product lifecycle stages using the examples of 2 market giants - Apple & Coca Cola.