Product Development Life Cycle: The 4 Stages Explained

Managing Introduction, Growth, Maturity, and Decline

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What is Product Development Life Cycle Management?

The product development life cycle describes the 4 stages of a product’s life: 1. Introduction, 2. Growth, 3. Maturity, 4. and Decline. It is fundamentally part of your product development strategy.

Just as human beings pass through predictable stages of birth, childhood, adolescence, maturity, and an inevitable decline, products and services pass through similar phases. Product marketers and product managers may change their strategies to maximize outcomes at each stage. Strategies vary depending on the source of the life cycle stages.

Generally, products pass through four stages:

  • Introduction Stage
  • Growth Stage
  • Maturity Stage
  • Decline Stage 

During the introduction phase, time to market and innovation might be the focus; later stages might focus on maximizing revenue and profits.

New Product Development Process vs Existing Products

The diagram above shows the product life cycle divided into two components: 1) a product development process stage where new products are created and 2) a stage of managing existing products in the marketplace. The new product development process stages involve the product design and product launch. The portion of the product life cycle (growth, maturity, and decline) is concerned with managing products already in the marketplace.

Each component — product development and managing existing products — has its techniques, methodologies, and metrics or KPIs. Both components must include customer feedback to maximize the product’s value throughout its life cycle.

Since product development commercialization involves considerable effort and a significant investment, it is often treated apart from the remainder of the product life cycle. However, developing new products cannot be divorced from the totality of that life cycle. Developing a new product is just the beginning of a long journey. Note that product development life cycles apply just as well to agile product methodologies.

The early stages of this process include idea generation, concept testing of the product idea with stakeholders and customers, concept development, and other front-end activities typically performed by product management & the marketing team. In parallel, you may wish to conduct market research related to the product concept, where you might examine competitive advantage and perform a more detailed business analysis. You might also take the most innovative ideas to a focus group (or social media groups) to collect feedback from these stakeholders before heavy investment.

Stages of Product Development Life Cycle

Introduction Stage (Development Stage)

This phase, also known as the product development stage, is where teams bring new products to life, whether for established companies or entrepreneurs launching their first ventures. It’s a structured process that starts by identifying customer needs and pain points. Teams then brainstorm product ideas, assess their feasibility, and refine them based on user feedback. A core focus throughout this stage is optimizing the user experience – ensuring the product is functional and truly valuable to its target audience. This involves activities like design, prototyping, and testing new features. Ultimately, the goal is to establish a strong product-market fit, validate the chosen strategy through user feedback and testing, and determine the optimal pricing model. The final product is launched, ready to deliver its unique value proposition to the market.

Product managers and product development team members work together in this first stage of the product life cycle to conceive, design, and launch successful products with features that differentiate them from their competitors. This workflow often includes project management in addition to product management (or product owners).

Growth Stage

In this stage, Product Marketing Managers oversee the new product as it slowly gains brand awareness and market acceptance. If a product is successful, it will have competition. The product owner must adjust marketing strategy, campaigns, or distribution channels to meet competitive threats and retain market share. Marketing efforts can make or break the ultimate market share during this phase.

Maturity Stage

Sales growth levels off in the maturity stage. Yet, this stage is often the most profitable since companies often find ways to increase efficiencies in manufacturing or distribution, reducing production costs. Incremental improvements may increase the product’s functionality, making it an even better fit for its target audience.

Sometimes, product managers adjust pricing downwards to compete more effectively in their target markets. Since the existing product is now known, marketing may focus more on product differentiation than brand awareness.

Decline Stage

Inevitably, a product reaches a saturation point, after which demand decreases. This is especially the case in areas where technology is rapidly changing. For example, the iPod was an innovative and successful product in its heyday, but demand decreased as the iPhone took over the functionality of earlier devices. This decline does not mean that the iPod failed as a product. It inevitably experienced a decrease as the iPhone grew.

During the decline, product managers might seek ways to reach new markets and find new potential customers to squeeze the last juice from the fruit. In healthy companies, the product development cycle is an ongoing process where new product concepts are continuously ideated and validated. Thus, new offerings are ready to replace products in the decline stage.

Afterlife scenarios

After a product or service has been retired, several things can occur. For some products, there is simply a death with no afterlife. The product is discontinued, sometimes replaced by a new product, and sometimes not.

Another scenario is that a product officially past its prime and scheduled for retirement may be cannibalized and turned into other products by integrating features of the combination of the products. Developers might spin off parts of the product, such as bits of features or technology, to incorporate them into new offerings. The product, as developers know it, comes to the end of its product life cycle, but it lives on, in some sense, in the form of other products.

In a third scenario, some products may be resurrected after a period of dormancy. Sometimes, a fad or fashion might lead to the premature demise of the product, and when that trend passes, the product will return. An older product may sometimes be repurposed and resurrected after an untimely death. The customer base might find a new use for an old product, leading to its resurrection.

Some factors may also impede the “natural” flow of the product development life cycle. Startling new technology might enter the market and disrupt existing offerings, creating the need to rethink an in-market product that is still in its prime.

A related factor is stiffer competition from new entrants and copycats. New product success breeds competitors, and the need to compete might mean fundamental changes to a product that speeds it artificially through its natural life cycle.

Societal trends, such as the growing concerns about global climate change, can significantly impact a product’s life cycle. Like sustainable alternatives, products that align with these trends may see increased adoption and a longer lifespan. Conversely, products deemed environmentally unfriendly might face an earlier decline in demand. Similarly, changes in the political landscape, like wars and economic sanctions, can disrupt the natural cycle for new products. Limited access to resources or shifts in consumer spending due to financial instability can hinder adoption and shorten the product’s life cycle.

Product Management vs. Product Marketing

Both product management and product marketing deal with the life cycle of new products. However, they are distinct functions that are often confused. The essential distinction is between inbound marketing and outbound marketing. Inbound marketing is about listening to the customer’s voice and then translating customer needs into features. Outbound marketing brings products outbound and maximizes their effectiveness in the marketplace.

Product Managers are inbound marketers. They help a dev team maximize product/market fit, leverage brand position, and follow the product roadmap. They also ensure that the resulting product release optimizes margins and pricing. This is not a part-time role; in Silicon Valley, it is often the second most important role after the CEO.

Product marketing managers manage the lifecycle of existing products, such as shipped products, and give value to paying customers. Their domain is outbound marketing—bringing the product to life and outbound with sales, customer success, and support. Also, this is rarely a part-time position. In mature markets, this role is second to the general manager (these are P&G’s brand managers).

Unfortunately, these roles are too often indistinct. Companies do not distinguish inbound from outbound marketing, leading to a lack of clear roles and outbound opportunities. Usually, the victim of this confusion is the development team, which does not get adequate and timely guidance on product requirements and user stories – causing delays and definitions to drift.

The urgency of product marketing needs often drowns out the more strategic needs of the product team. The key is understanding the product life cycle: developing and introducing new products is distinct from managing in-market offerings. We help organizations via Product Management Consulting to help balance near-term with strategic goals to ensure product teams stay focused. Often, both functions work on pricing strategy.

Managing the Product Portfolio & New Product Development

Companies that survive past the startup phase develop a portfolio of products, each at various stages of the product development life cycle. There are four commonly used frameworks for managing these product portfolios. These frameworks help managers choose the appropriate level of investment based on market and product characteristics and manage earlier-stage products as they enter the next stage in the life cycle.

The infographic contains 7 examples, forming a foundation for a case study approach to understand product development life cycle management. Examples are Apple, Amazon, Google, Ikea, Netflix, Coca-Cola, and Kellogg.

Ansoff Matrix maps a product axis against a market axis. It places new vs. existing products against new vs. existing markets. This approach creates four quadrants representing everything from conservative market penetration (existing products, existing markets) to diversification (new products in new markets).

GE/McKinsey’s Portfolio Analysis Matrix examines an industry’s attractiveness and maps it against the relative strength of the business unit. It balances internal and external factors to guide investment in the product portfolio.

Innovation Ambition Matrix is a simple plot with axes for markets and products. It is used to gauge investments at the new product development phase of the product life cycle.

BCG Growth-Share Matrix maps growth rate against relative market share. It guides investment in new products and marketing existing products by identifying high growth/high share opportunities (Stars) and avoiding low growth and low share (Dogs). The remaining quadrants are “Question Marks” (Low Share, but High Growth) and “Cows” Low Growth but high share.

Tools for Product Development Life Cycle Management

Software developers have created numerous applications for Product Lifecycle Management (PLM) that enable agile decision-making. However, practitioners have developed specific essential tools available to anyone with a spreadsheet or a graphics package. The tools below can help any organization improve product development life cycle management.

A Platform Derivative Chart

A Platform Derivative Chart depicts a set of related products over time. It is a variation on a Product Roadmap that highlights relationships between derivatives. You may find it the most helpful type of roadmap because the horizontal and vertical axes are labeled, the products are precisely mapped, and the positioning is clearly described.

The Platform Derivative Chart is a technology/design-driven diagram of related products with some underlying common design components. The Product Planned Roadmap shows the portfolio of products under development that may or may not have common technologies, while the Platform Derivative Chart shows the life cycle of the platform and the family of derivatives, indicating the relationships between them.

These relationships can include cost, performance, quality, or feature density. For example, in the computer business, the Platform Derivative Chart might show a 15″ laptop family where the product platform is the base product, and the variants appear at various price points with different feature sets, such as the amount of memory, hard disk size, CPU speed, and graphics capability.

A laptop division can integrate all products on one chart, showing where the different platforms exist in the family regarding price points and feature sets. In addition, competitors can be displayed on the chart to communicate the product’s relative performance against them.

The head of Product Management often creates this chart, which your head of the business unit reviews and approves. There should be a clear line of sight between the business unit’s strategic plan, the Platform Derivative Chart, and the product pipeline. Internal “customers” for the chart may include Engineering, Sales, Operations, Customer Service, and related functions. In many organizations, this is the tangible conversion of product strategy into natural products.

Product Portfolio Investment Map

A Product Portfolio Investment Map is a snapshot of portfolio management showing the relative emphasis on various classes of new product development projects. Typically, these investments are grouped according to the risk amount each project assumes. For example, a company might organize its projects as follows:

  • Core products
  • Adjacent Products
  • Transformational Products

A core product modifies an existing product. It is sold to existing customers and leverages existing product technologies. Adjacent products are conceptually and functionally the same as existing products, but they serve a new market. They may also consist of a substantial modification to a product, expanding the market the company has already entered. A transformational product innovates in both products and markets simultaneously and accordingly has the highest risk—but also the highest potential return.

These are only some of the tools available to help companies visualize their portfolios and manage the product development life cycle. (More templates for product development life cycle management are available here.)

Product Roadmaps

A product roadmap is a graphical representation of related products over time, typically two product cycles or 24-36 months. Roadmaps have at most a monthly granularity but often display a quarterly time frame. The vertical axis is strategically vital as it shows the products, how they relate to each other, and how they might relate to the competition in ways that matter. Although one of the most common vertical axes is cost, it can also be speed or the critical feature parameter.

Product Roadmaps provide a visual explanation of a company’s strategy. The optimal Product Roadmap inspires innovation by revealing your product’s strongest differentiators to ensure you hit your business goals. Product roadmaps can also improve execution because they help formulate platform and derivative strategies and how they unfold over time.

Done right, product roadmaps serve as an organizing principle for decisions around technology requirements, resource allocation, and product positioning. They help align engineering, marketing, sales, support, and the C-suite toward standard product development goals.

Product Life Cycle Management Software

Product Life Cycle Management (PLM) software manages all of the data and processes related to products from ideation to decline. After products are launched, it has become essential to have a system to manage the related data, including parts numbers, SKUs, requirements, design and manufacturing specs, supply chain data, change orders, and quality documentation.

The earliest PLM software systems were designed to manage the large drawings produced by Computer Aided Design (CAD) systems. These early PLM solutions were focused mainly on product development. However, as PLM software developed, it became a vital tool for managing the process’s Growth, Maturity, and Decline phases. Increasingly sophisticated PLM systems integrate data essential to in-market products from functions such as sales, manufacturing, quality, and regulatory compliance as products mature in the marketplace.

Today’s PLM tools continue to break down the silos between the various aspects of managing in-market products, including integrating work that happens all over the world. Today’s tools are oriented toward managing critical relationships with suppliers and customers. While the earliest PLM tools were focused on streamlining internal processes, 21st-century tools are increasingly customer-centric. They enable business transformations in ever-changing markets.

Tips for Product Development Life Cycle Management

Tip #1: Have a means of visualizing your complete product portfolio.

Whether using the product portfolio investment map described above or some other means, companies need to be able to see their portfolio at a glance. This will enable them to see where products stand relative to their maturity, their market segment, and the product development life cycle.

Tip #2: Develop a minimum viable product (MVP) and then iterate: products and marketing strategies will continue to develop after the product launch.

Many companies have discovered that products do not have to have perfect functionality right out of the gate. The life cycle of products is long. First, develop prototypes that work, refine them, launch these refinements, and then you can continue to improve them as the life cycle unfolds. Either the products themselves or their related marketing efforts will shift over the product’s life cycle.

Tip #3: Clarify the roles of those involved in new product development vs. those managing existing products.

In too many companies, the roles of Product Managers, those responsible for inbound marketing, and Product Marketing Managers, those responsible for in-market products, become muddled. Since new product development is one-half of the battle (at least!), separate the roles of inbound and outbound marketing and clearly define them.

Tip #4: Outbound maturity stage, look to carefully differentiate your products.

As products mature, they face increased competition. This is the stage where product differentiation is critical. Be aware of the key differentiation points before your product reaches this stage. Then, move from a brand awareness strategy to one that differentiates offerings from others in the marketplace.

Tip #5: Look to leverage adjacent markets, especially as products approach the decline stage.

Products decline as existing markets become saturated or are disrupted by new technologies. Leveraging adjacent markets is a way of extending the life of an existing product. Think about how to take existing products and leverage them in adjacent markets. For example, a game developer might open an entirely new market by creating a game-like app that HR managers use to test and screen candidates. Think this through before the product enters the decline stage.