What is Product Life Cycle Management?
Product life cycle management refers to the entire lifetime of a product, all of the stages from 1) the time a product is conceived to 2) when a team develops and launches it, to 3) the time its sales decline and 4) it is retired from the marketplace or replaced.
Just as human beings pass through predictable stages of birth, childhood, adolescence, maturity, and end of life, products and services pass through similar phases. Product marketers and product managers may change their strategies to maximize outcomes at each of these stages. Strategies vary over the life cycle timeline.
Generally, products pass through four stages that describe the product development life cycle:
- Introduction Stage
- Growth Stage
- Maturity Stage
- Decline Stage
During the introduction phase, time to market and innovation might be the focus; managers in later stages might opt to streamline operations, maximizing revenue and profits.
New Products and Existing Products
The diagram above shows the product life cycle divided into two components: 1) a product development stage where new products are created and 2) a stage of managing existing products in the marketplace. The product development stage involves the product design process and product launch. The portion of the product life cycle (growth, maturity and decline) is concerned with how to manage products that are already in the marketplace.
Each of these two components — product development and managing existing products — has its own techniques and methodologies.
Since the new product development process involves considerable effort and a large investment, it is often treated apart from the remainder of the life cycle. But 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.
Stages of the Product Life Cycle
This is the stage where teams realize new products. We may also refer to this phase as the product development stage. Generally, products follow an orderly development stage that identifies customer needs, brainstorms product ideas, designs the product, test markets new features, establishes product-market fit and pricing, validates the strategy, and launches the new product. Product managers and the product development teams work together in this first stage of the product life cycle to conceive, design and launch successful products.
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, marketing campaigns, or distribution channels to meet competitive threats and retain market share.
In the maturity stage, sales growth levels off. 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 functionality of the product, 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 strategies may focus more on product differentiation than on brand awareness.
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 decline stage as the iPhone grew.
During the decline stage, 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 there is continuous ideation and validation of new product concepts. Thus new offerings are ready to take the place of products in the decline stage.
Product Management vs. Product Marketing
Product Management and Product Marketing are distinct functions that are often confused. The essential distinction is between in-bound marketing and out-bound marketing. In-bound marketing is about hearing the voice of the customer and then translating customer needs into features. Out-bound marketing is about bringing products to customers and maximizing their effectiveness in the marketplace.
Product Managers are in-bound marketers. They help a dev team ensure that its product/market fit is maximized and that it leverages brand position and follows the product roadmap. They ensure that the resulting product release optimizes margins and pricing. It is not a part-time role, and in Silicon Valley it is often the second most important role after the CEO.
Product Marketing Managers manage the lifecycle of existing products, products that are shipping, and that are giving value to paying customers. Their domain is out-bound marketing – bringing the product to life and working with sales, customer success, and support. Also, this is rarely a part time position. In mature markets, this role is second in importance to the general manager (these are P&G’s brand managers).
Unfortunately, these roles are too often indistinct. Companies do not distinguish in-bound from out-bound marketing and this leads to a lack of clear roles and responsibilities. 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 to understand the product life cycle: developing and introducing new products is a distinct activity from managing in-market offerings.
Managing the Product Portfolio
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 and stakeholders 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.
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 looks at the strength of an industry’s attractiveness and maps it against the relative strength of the business unit. It guides investment on the product portfolio by balancing internal and external factors.
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 in 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 Life Cycle Management
Software developers have created numerous applications for Product Lifecycle Management (PLM) that enable agile decision-making. However, practitioners have created certain basic tools available to anyone with a spreadsheet or a graphics package. The tools below can help any organization improve Product 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 useful 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 Roadmap shows the portfolio of products under development which 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 amount of memory, hard disk size, CPU speed, and graphics capability.
It is possible for a laptop division to integrate all products on one chart showing where the different platforms exist in the family regarding price points and feature sets. In addition, it is possible to display competitors on the chart to communicate the relative performance of the product against them.
The head of Product Management often creates this chart, and your head of the business unit reviews and approves it. 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 strategy into product.
Product Portfolio Investment Map
A Product Portfolio Investment Map is a snapshot of product portfolio management that shows the relative emphasis on various classes of new product development projects. Typically, these investments are grouped together according to the amount of risk each project assumes. For example, a company might organize its projects as follows:
- Core products
- Adjacent Products
- Transformational Products
A core product is one that introduces a modification to 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 market that is new to the company; or they may 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 life cycle management are available here.)
A product roadmap is a graphical representation of a set 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 the most important as it displays 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 key-feature parameter.
Product Roadmaps provide a visual explanation of a company’s strategy. The optimal Product Roadmap also inspires innovation because it reveals your product’s strongest differentiators to ensure you hit your business goals. Product roadmaps can also improve execution because they help to 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 common product development goals.
Product Life Cycle Management Software
Product Life Cycle Management (PLM) software manages all of the data and processes that relate to products from ideation to decline. After products are launched it becomes essential to have a system to manage the data related to them including parts numbers, SKUs, requirements, design and manufacturing specs, supply chain data, change orders, and quality documentation.
Product Life Cycle Management (PLM) tools are central repositories for product information. They create a single version of the truth that connects all product-related information into an Enterprise Resource Planning (ERP) or other management system. Thus, product information is integrated into the value chain, into other business processes, and into the wider ecosystem.
Typically, PLM software systems offer to integrate data across the following categories:
- Product data management (pdm)
- Document management
- Bills of materials
- Manufacturing processes
- Project management documentation
- Engineering changes
- Quality management
- Supply chain management
- Customer feedback documents
- Customer relationship management (CRM)
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 the product development side. But as PLM software developed, it became a vital tool for managing the Growth, Maturity and Decline phases of the PLM process. Increasingly sophisticated PLM systems integrated data essential to in-market products from functions such as sales, manufacturing, product quality, and regulatory compliance, as products matured 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 the key relationships, mainly 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.
Checklist for Product Life Cycle Management
- A means of visualizing your complete product portfolio.
Whether it is 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 companies to see where products stand relative to their maturity, their market segment, and the product development life cycle.
- A minimum viable product (MVP) and that is then iterated: products and marketing strategies will continue to develop after 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 strategies will shift over the life cycle of the product.
- Clear roles for those involved in new product development vs. those managing existing products.
In too many companies the role of Product Managers, those responsible for in-bound 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 in-bound and out-bound marketing and clearly define them.
- Carefully differentiated products during the maturity stage.
As products mature, they face increased competition. This is the stage where product differentiation is key. Be aware of the key differentiation points before your product reaches this stage. And then move from a brand awareness strategy to one that differentiates offerings from others in the marketplace.
- Adjacent markets leveraged, especially as products approach the decline stage.
Products decline as existing markets become saturated, or as these markets are disrupted by new technologies. Leveraging adjacent markets is a way of extending the life of an existing product. Think 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.