Life Cycle Management

The product development life cycle is the successive stages a product goes through from its initial conception to death. Whether it is a physical product, service or computer application, the product development life cycle applies equally, but can differ slightly in response to industry or sector requirements. Companies engage in product life cycle management to simultaneously manage the inputs and outputs from each stage to maximize business outcomes and minimize any negative environmental and social impact.

The first stage of the product development life cycle is termed the new product development stage. This is known as the embryonic stage where a niche market is identified and the product defined to fulfill the needs and requirements of the identified opportunity. Capital is raised to establish the business and manufacturing framework to bring the product to market.

The introduction stage of the product development life cycle is when the product is introduced to the market. Promotion activities focus on creating market and brand awareness. Distribution channels are established and expanded. Operating profit is not realized at this stage because the initial market establishment costs and marketing spend is absorbed by growth initiatives to further capture and expand market share.

The growth stage of the product development lifecycle is where market acceptance and awareness helps to fuel product growth. Distribution channels are expanded and marketing activities are very active in response to this. Production is increased to meet the needs of the market and economies of scale are reached. Profits start to flow at this stage which captures the attention of potential competitors who seek to enter the market. Competition intensifies and companies engage in brand differentiation to win consumer loyalty.

The Maturity stage of the product development life cycle is when the product profit cycle reaches a peak. The market is fiercely competitive at this stage with marketing activities fighting for additional market share and to prevent cannibalization. Manufacturing concentrates on improving production efficiency and the business focus is on optimization to extract additional profits. Marketing activity is oriented increasingly towards product differentiation and superior brand awareness.

The decline phase of the product development life cycle is when the market starts to shrink and profits level off or start to decline. Mergers and acquisitions take place as some companies consolidate and others leave the market. Market spend is reduced and production cost cutting takes place. Companies are faced with decisions to reduce product lines. This can be in response to a new superior product or technology that can render the product out off date or unattractive due to changing consumer preferences, needs or tastes.

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