Product life cycle: basic theory

The life cycle of a product is like a biography of a person, only for goods and services. It includes several key stages: from the birth of an idea to the moment when the product leaves the market. Understanding this cycle helps companies make the right decisions at every stage.

Let's go the standard way and consider all the stages in turn.

At this stage, the product is just emerging. From the idea to the first prototype, the teams are engaged in research, hypothesis building, development and numerous tests. It is important not only to create a working product, but also to make sure that it meets the real needs of the market.

It happens that a product is ahead of its time. Like the same spinners invented in the 90s, but became popular only in 2017.

- Research of the target audience and the market;
- Development of an MVP (minimally viable product) for hypothesis testing;
- Getting feedback from the first users and adapting the product to their needs.

Facebook started as a closed social network for Harvard students, allowing Mark Zuckerberg and his team to test ideas and collect feedback in a controlled environment before scaling it to the general public.

The product enters the market. This is the time when the first sales begin and it is important to actively work on brand awareness. Initial sales are often small, but they are critical for collecting data on user behavior. The presence of sales confirms that the product is needed by the market. The stage ends when our unit economy converged, we began to make a profit.

- Development and implementation of a marketing strategy;
- Monitoring the market reaction and adjusting the product;
- Optimization of sales paths and marketing channels.

The iPhone was not the first smartphone on the market at the time of launch, but thanks to a competent marketing campaign, Apple was able to create a huge demand for its product, offering the user a new experience of interacting with the phone.

Uber has been reaching the break-even plateau for a very long time and has only recently done so.

A huge number of services that we use still work in minus - X (ex-Twitter) or well-known online schools.

The product is starting to gain popularity, and sales are growing. At this stage, it is important to focus on retaining customers and increasing their loyalty, as well as attracting new users. The main task is to reach the scale.

- Expanding the product line to meet additional customer needs;
- Optimization and automation of processes to ensure efficient scaling;
- Active promotion of the product and work with customer feedback.

Amazon started out as an online bookstore, but gradually expanded its range and introduced innovations such as Prime, which allowed the company to reach a new level and become a global leader in e-commerce.

And the same Netflix, few people are in the course, but they first sent the DVD by mail. And Instagram was conceived as a place for photos, but it gave rise to so many influencers.

At this stage, the growth rate slows down. The product is well known in the market, and the main task is to maintain its popularity and profitability. At this stage, our task is to make the unit economy as clear as possible. Maximum profit from each client at minimum cost.Well, for good, at this stage, the company should be closely engaged in innovation and the release of a new modern product.

- Product innovation and improvement to maintain interest;
- Development of loyalty programs and promotion of repeat purchases;
- Effective cost management to maintain margins.

Coca-Cola has been on the market for over a century, but the company continues to invest in marketing and developing new products to remain relevant to consumers of all ages. She even became a symbol of Christmas.

There are also special cunning people, like Microsoft, who buy out interesting startups or already well-known brands, like LinkedIn or GitHub.

Demand for the product is declining, and the company needs to make a decision: try to revive the product, find new markets, or gradually reduce production. It's sad, but the fact is, someone disappears, someone changes.

- Analysis of the reasons for the decline in demand and the search for ways to resume it;
- Diversification of the product portfolio to reduce risks;
- Gradual withdrawal of the product from the market with minimal losses.

Spinners again! Let me remind you that they were extremely popular in 2017, but their popularity quickly faded. Manufacturers who were unable to adapt and find new niches faced significant financial losses.

Do you remember phones like BlackBerry? That's what we're talking about.