The third stage in the Product Life Cycle is the maturity stage. If your product completes the Introduction and Growth stages then it is likely to spend a great deal of time in the Maturity stage. During this stage sales grow at a very fast rate, then gradually your market share will begin to stabilize. The key to surviving this stage is differentiating your product from the similar products offered by your competitors. When sales start to stabilize you will need to go back to the development stage, analyse your product and sales performance, to be able to innovate new features and services to help your company stay competitive in the market.
Product Life Cycle Examples
If you do not restart the product life cycle here, you are more than likely to reach the decline stage. This is the stage in which sales of your product begin to fall. Either everyone that wants to has bought your product or new, more innovative products have been created that replace yours. Ideally between the maturity and decline stage you would restart the product development cycle, to continue the success of your business.
Some companies decide to withdraw their products completely from the market due to the downturn. The product development cycle is a part of the product life cycle.
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A brief explanation for the difference between the two is: The product development cycle focuses on the planning, development and evaluation of a product. The planning stage consist of work that needs to be done before any development commences.
You want to make sure you have a valid business case for the product and a solid strategic plan to give your startup the best chance of success. To begin Market Research and Competitive Analysis should be carried out, to get an understanding of the market, and the key players in them. This research will need to answer questions such as:.
Your research should also look at cost of production and the price points of the product. Answering all these questions will be vital for your business case, by proving that there is a need for the product and there is profit to be made on it. Apart from creating a business case, a product Roadmap and Strategic Plan need to be written at this stage, before development begins. Simply put this is when the product be it software or hardware is built. The product needs to be broken down in to features, with specification and user stories for each feature.
Once the features have been defined with user stories and specification, they should be ranked by difficulty and priority. This will help identify what features are needed most, and how difficult — time consuming it will be to create a minimum viable product. In many cases your first product release will not contain all the features you or your stakeholders wish for. The first release is likely to be an MVP minimum viable product containing the core features necessary for the product to be of use to your customers and succeed in the market.
Where are you in the 7-stage cycle?
You will need to management resources and development to deliver a working product, that contains the core features for success in a timely manner. Early feedback is key to test the assumption made during the Plan stage. If the feedback from the evaluation is some features need changing then tweak them. How do you evaluate the product? Use Key performance indicators as metrics to measure the success of the product. All these metrics can be used as part of the product evaluation.
This stage is very much the same as the Introduction stage of the Product Life Cycle. Launching the product involves letting your target audience the product is live. Soon after launch, you should assess your performance. Assessing the product entails collecting metrics and analysing them, to gather insight in to the performance of the product.
Similarly to the Evaluation stage, each feature of the product will need to be tested and evaluated to see if a feature worth keeping and iterated on or being doped from the product completely. This is done by assessing what effect advertising, social media and CRM Customer relationship management campaigns have on product engagement and revenue. For example does a email campaign activates more customers compared to a social media campaign?
Or is the advertising campaign increasing customer signups? Iterate and Kill. Once assessment and evaluation of the product features is complete, a decision needs to be made on which features to keep and upgrade and which to remove. This should be done in a well planned manor, with customers should be informed of the removal of features.
For the features that are kept, they will need to be iterated on and upgraded, to ensure competitiveness. This involves starting the Product Development Cycle all over again. Following the Product Development Cycle and Product Life Cycle will ensure your product can build a strong market share, and fend off competition, by continuously innovating.
Sign in. Get started. Fast early growth in a market is often eroded when competition gets fierce and prices are forced down due to competition. For example, look at the following graph. The example chart is not actually atypical. The first company represents a normal software company that sells its products directly either via sales staff or directly off of the internet. This could also be a travel website who gets paid a bounty for selling airline travel. Companies like to have high numbers in their revenue column but this can be quite misleading. Many eCommerce companies are in fact, middle men.
Amazing growth! That in and of itself is an achievement.
Both companies look the exact same after one year. So which company is better run?
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The answer is that you have no way of knowing. What did they actually do? They used the money to hire a bigger tech team so they could roll out their second product line.
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They hired a marketing team to promote their products more broadly. They got a bigger office space so their employees would feel comfortable and they could improve employee retention.
If there was strong market demand for their product then this investment might pay off handsomely. Even though Company B initially looked prudent, it turns out that the investment that Company A made in people led to a higher annual growth rate. Growth matters. Note that they likely raised this in 2—3 tranches, not all up front or all at once. Again, it depends. A Final Note on Profitability vs. Being Cashflow Positive. More , but experience tells me this is worthwhile to many.
Many investors care much more about cashflows than income statements.
Related Stage, Sell, Profit
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