When you first venture into new product territory, you face a lot of decisions. For example, you might wonder whether you should take a traditional business approach or opt for a lean startup. You must decide when it’s time for prototyping and beta testing.
In the middle of all of this product creation or product development, it’s easy to forget that every product has a defined product life. If everything goes well, it will pass through the four main stages of the product life cycle.
Feeling hazy on the product life cycle? Keep reading for some tips on understanding it.
The product intro stage isn’t the same for every company, but it is the moment when you do your initial product release. Traditional businesses typically do this after a complete product development cycle with extensive testing and focus groups.
For lean startups, this happens during the development phase. These companies go to market with a minimum viable product and refine it based on customer feedback.
In both cases, though, the company hopes the product gains traction with early adopters.
In the growth stage, early adopters give way to mainstream customers who now find the product appealing. You typically see a sharp uptick in orders, market circulation, revenue, and profitability.
This stage also brings some other advantages. The increase in overall sales typically lets you take better advantage of economies of scale for increased profit per sold product. You can also typically implement efficiency improvements based on experience.
The maturity phase typically means that you enjoy a stable market share, but also that most of your ideal customer base owns the product already. You face increased competition from competitors offering comparable products and lower-end knock-offs.
In essence, you witness the beginning of the end. Most companies start looking for new markets, enhancements, and alternative uses for their product to keep it profitable for a little longer.
The saturation phase happens when most of the people who are likely to buy your product at its current price point already own it. This phase can also happen when an innovative new product renders your product irrelevant. Think CDs displacing cassette tapes and then MP3 players displacing CDs.
You can stay in the market with ruthless cost-cutting measures in production. Many companies stop production altogether or sell off their associated assets. If you’d like a deeper look into the product life cycle, you can know more here.
Product Life and Your Business
Understanding where your product stands in the overall cycle of product life lets you make informed decisions.
If you’re in the growth phase, there is a logic in infrastructure investment. After all, you can maximize profit if you improve your production process. If you’re approaching the end of the maturity phase, looking for someone who wants to buy out your business makes more sense.
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