Understanding the lifecycle of a product or service
From development to obsolescence, understanding a product or service’s lifecycle is essential to adapting to its changing role in the marketplace.
Inherent in building a business and its corresponding products or services is seeing them through different phases of a business lifecycle. There’s the initial buzz and excitement of launching your venture, but at the same time it is important to sustain that energy leading to the next key stages of growth as you may transition. Similarly, your products and services also journey down a path.
Understanding the lifecycle of a product or service will help you successfully navigate your way through different stages or perhaps spur a new business idea that puts you right back at the start.
Lifecycle phase: Introduction and release
This stage begins with development of a new product via a product development strategy. That involves testing and market research to make sure that the proposed product is something the public wants and is willing to pay for, in addition to designing the product itself. It’s key to analyze the marketplace and identify a niche that is not being served by the competition’s product offerings.
Once the product is designed, it’s time to test market and introduce to a small number of early adopters or a small geographic group. Get extensive feedback to redesign or shift your marketing strategy to gain wider acceptance.
Then the product is released. Distribution is likely limited to certain markets or populations in order to keep costs down while building the brand.
Lifecycle phase: Growth
At this stage, it’s expected that product demand takes off and is characterized by a large sales increase over the previous period.
Public awareness and sales increase in tandem, meaning that it’s time to ramp-up manufacturing and expand into new markets via market penetration strategies.
At this stage, you may be fortunate if competitors have not had enough time to develop and release competing products, so your unique offering will be alone for the most part.
You will want to offer enhanced service options or add small improvements to the product that you could target to new markets.
Now is also a good time to create variations of the initial product or create a related product or service in order to broaden appeal to new audiences.
Lifecycle phase: Maturity
At some point sales will flatten out for two primary reasons: 1. Everyone who wants your product already has it. 2. The competition has caught up and is offering products that are seen as the same or better.
This may also be the time to add new features and try out new marketing strategies in order to make your product look fresh again.
You could seek out untapped markets and find a way in.
Lifecycle phase: Decline
In this phase, sales may decline to the point where it is no longer profitable to maintain the product line. Perhaps competition has become so fierce that the product is ubiquitous, or the public has moved on to a new technology.
Some businesses may decide to discontinue manufacturing and sell off remaining inventory.
Others may sell the manufacturing rights to another firm that will continue to make the product at a lower cost and profit.
As you look to what’s next, you might also consider a diversification strategy of developing related or new products for completely new markets.
For certain products, it’s time to go back to development and see if you can find a new innovation that will make your product unique in the marketplace again, in which case, the lifecycle starts all over. A successful business will anticipate the cycle for its products or services and create business strategies that correspond to their place in the cycle.