Navigating the Stages of the Product Life Cycle
First you need to know your stage, then define what to do
What’s the best strategy for your product?
I get this question more often than I can imagine. Unfortunately, I cannot give a direct answer to that. Before discussing strategy, you need to understand the stage of your product. A growth strategy won’t work with a product in a decline stage.
Let’s take this blog to discuss the product life cycle and understand what to do when.
Overview product lifecycle
Which stage is your product? To answer this question, you need to understand the product lifecycle.
In 1966, Raymond Vernon wrote the product lifecycle theory, defining the four stages of products. Although that’s before our digital era, it’s still applicable to our reality. The following image shows how the lifecycle develops.
Let’s clarify the meaning of each phase:
Introduction: You’re still figuring out how to penetrate the market. You need to craft a solid go-to-market strategy. The chances of pivoting are high as you don’t know how the market will react. Your strategy should get your product to innovators and early adopters.
Growth: The market has accepted your product, and demand is increasing. The strategy should enable you to increase your market share. You must understand your adoption cycle and adapt your strategy to your audience. What works for an early adopter won’t work for the early majority.
Maturity: Once your product reaches a certain sales level, you struggle to increase your user base. A sound strategy will address retention to ensure you don’t lose customers. You may consider introducing a new product to keep your customers. Sometimes, it means disrupting yourself before somebody else does it.
Decline: Inevitably, your product will become less relevant due to new options in the market or other aspects. The meaning is that your product is losing customers. When you address the maturity phase adequately, the decline won’t scare you. It will be a transition from one product you offer to another. But if it’s too late, your competitors will be happier than you.
Failing to recognize your product stage and audience will lead to the wrong strategy.
Introduction Stage
Before you hit the market, you’ve got a lot of work to do. Let’s clarify what needs to happen to create a new product:
Identify a problem worth solving
Define your target audience
Create a business model
Gather funds to support your product development
Understand competition
Clarify your market positioning to create differentiation
Build the product
This phase is highly dangerous. A common strategy is to build, present, and sell. Seldom does it work unless you’ve got a brand that customers already love and would buy “whatever” you create. A better approach is to speed up the learning time to understand what resonates with your potential customers.
During the introduction phase, you want to de-risk your product. A good way of doing it is to get customer commitment as fast as possible. Instead of building to sell, you can sell to build. Let me give you an example with my Cohort Product Discovery Done Right.
I wanted to craft a course to help people hone their discovery skills, but creating a high-quality course takes time. I needed to ensure my value proposition spoke to my audience, so I made a landing page available (it took me 2 hours) and promised a live course in the future. I’d create the course only if it’d get five paying students, which I got in a week. So, I created it afterward. Otherwise, I’d refund all students and rework my value proposition.
Growth Stage
When do you know you’re in the growth stage?
You will be ready to scale up once:
A handful of customers fell in love with your product
You have plenty of outstanding reviews
Your current customers are loyal to you
New customers are coming to you through word of mouth
The growth stage isn’t a black-and-white science, but it means your product has reached market fit, and is time to scale up. Yet, I must warn you that scaling up your product too fast will backfire, so start slow and grow gradually.
During the growth stage, it’s crucial to simplify how you acquire customers. A few good practices are:
Enable customer referral
Develop a solid marketing strategy
Increase social network presence
Help potential customers know you exist
Reduce time to value for your potential customers
When you’re in the growth stage, traction, as are customer acquisition costs and lifetime value, is vital to measure. Adapt as you learn, but be aware that what worked for a few customers needs to evolve to work for more. Keep your learning speed at full steam.
Maturity stage
It’s time for strong competition :)
When your product reaches its maturity, your strategy should prioritize customer retention. Competition will be stronger as you reach a solid user base, so your competitors want to win them over you.
The key to retention is to steadily deliver value for your customers and ensure you differentiate from the competition. Also, you can increase loyalty in different ways. For example, as an Apple customer, I am reluctant to change as everything is integrated. When I think about moving to Android, I remember I have a set of Apple products that work seamlessly, which I’m unwilling to change.
Hook your customers in, and get ready for the next stage.
Decline stage
Your product won’t last forever. That’s natural. Eventually, something will come and get your customers. iPhone got the Blackberry market, and lately, digital photography got Kodak. That’s why it’s critical to prepare for that.
During maturity, strive to create another product to hook your current customer base so the decline won’t be lethal for you.
Let’s take Apple as an example. iPod was the high-runner from 2005 until 2009, but Apple was already facing fierce competition. Realizing that, the iPhone was born, which Steve Jobs introduced as “iPod, a phone and an internet communicator.” Within that, Apple not only entered a new market but also could still give a reason for the iPod users to stay with them. Although the iPod was officially discontinued in 2022, the decline started in 2010.
Limitations of the product lifecycle model
The product lifecycle will help you understand the big picture and guide you in that direction, but it doesn’t give you all the answers. Let’s talk about a few limitations.
The growth stage is probably the longest; the challenge is understanding who you are targeting. For example, targeting the whole market is unwise once you hit market fit. You need a strategy to grow, gradually moving from early adopters to early majority, and then late majority and laggard.
I recommend combining the product life cycle model with the product adoption from Everett Rogers, author of Diffusion of Innovations. This will help you understand better how to grow your product sustainably.
Conclusion and key takeaways
Understanding your product stage is fundamental to crafting your strategy, organizing your team, and setting goals. Without that, you may run in circles and struggle to progress. Yet, you need to be aware of the model’s limitations. Combining the product life cycle with the product adoption will give you better guidance to evolve.
Here are the key takeaways from this blog:
Don’t craft a product strategy without a clear understanding of your product stage
Once you reach market fit, define how you will start your growth engine while keeping your learning speed at full steam
The maturity stage is dangerous as competition becomes stronger. It’s time to focus on retention while preparing for the next stage.
Don’t wait for the decline stage to catch you off guard. Work on a strategy to hook your customers in before they move to the next thing, e.g., introduce a new product.