The product life cycle is a fundamental tool for setting up a market penetration strategy or for maximizing the longevity and sales volume of a product already established in its market.
I- How to define the life cycle
A product’s life cycle refers to the different phases a product goes through, from its conception to its disappearance from the market. It allows you to compare sales and observe their evolution over time.
The product life cycle is a key step in product management, as it allows the company to manage its product portfolio and monitor their market position, allowing it to anticipate the launch of new products to replace those in decline.
II- The product life cycle stages
Cycle life Product is composed of several stages during which the company is obliged to adopt an approach to marketing life cycle which allows him to focus on how marketing strategies evolve to support the product through these different stages.
The stages of the product life cycle can be presented as follows:
1- Design
This first step focuses on the idea of the product and its environment. It therefore aims to establish the concept and typology of the product as well as the study of its market through the analysis of competitors and potential consumers during this phase where the product is in development, the costs assumed by the company are enormous.
2- Launch
This is the phase when the product arrives on the market. It is characterized by a slow start of sales due to the low awareness of the product and its lack of knowledge by consumers, for this reason the company finds itself obliged to allocate a significant budget to marketing and communication actions.
At this stage, the product isn’t yet profitable, because the costs of production and promotion are higher than the profits.
3- Growth
Growth is the most strategic stage of the process. At this stage of its life cycle, the product becomes profitable, thanks to the acceleration of sales, which allows the company to benefit from economies of scale by reducing costs.
The product begins to gain market share and the company can differentiate itself from the competition through its brand image, customer relations or positioning, with the aim of maintaining this stage of growth and making it last to extend the product life cycle and make it profitable for as long as possible. This phase is characterized by a sharp increase in profits.
4- Maturity
It refers to the market saturation phase during which demand and profits are greatest and where profitability is strong but stagnates and production costs are low, because the process is controlled.
However, it is imperative to continue promoting the product and analyzing customer satisfaction to maximize it and thus delay the decline stage.
Furthermore, the strategy widely adopted by companies during this stage of the product life cycle is the reinvestment of profits generated in the development of new innovative products.
5- Decline
This step is decisive, it arrives inend of product cycle and results in a decrease significant sales, of its market share and profitability.
This decline is a sign of a loss of consumer interest in this product due to changes in tastes, fashion phenomena or the arrival of a substitute product taking over the market for the aging product.
Faced with this situation, the company must make a strategic decision by choosing between:
- Boost your communication and marketing in order to try to boost sales;
- Create a new range more in line with customer expectations;
- Remove the product from sale.
It should be noted that the market with drawal is in no way a failure. It is a calculated and necessary act signifying the end of the product’s life cycle.
III- Product lifecycle management
Product lifecycle management (PLM) addresses every stage of a product’s lifecycle, from product design to marketing.
PLM software is essential to help companies develop new products collaboratively, at lower cost with faster and sustainable time to market.
In fact, the PLM system, which brings together disparate groups on a common platform, allows designers and engineers to access in real time the essential data they need, such as the visibility into down stream process limitations, customer feedback on current products, and data on product performance in the field.
as it also provides a view of reality to various stakeholders as well as suppliers to facilitate the sharing of feedback early in the product development process.
IV- The advantages of PLM
Companies choose to invest in PLM solutions for several reasons, including:
1. PLM improves efficiency by ensuring the performance of engineering teams, as it enables a two-way flow of real-time data to support better knowledge sharing and collaboration;
2. PLM offers an environmental benefit due to the reduction of manufacturing waste;
3. PLM helps reduce costs because it is more economical and less expensive to correct product-related problems identified early;
4. PLM accelerates the process of bringing products to market by providing a single version of reality with up-to-date information from each phase of the product lifecycle, allowing project managers to control deadline overlaps;
5. PLM helps improve collaboration between different teams within the company by facilitating targeted and effective communication within cross-functional teams and aligning them with the same objectives;
6. PLM helps reduce waste and improve product quality by allowing teams to break down complex tasks into iterative improvements and repeatable processes.
Product lifecycle management includes quality control measures and statistics at each phase to enable companies to make quick adjustments and corrections.
V- Product lifecycle management software
Among the plm product lifecycle management software, we find Oracle Agile PLM, which is a platform for centralizing product document management, root cause analysis, and product development within the company.
Moreover, Oracle product life cycle management software is more popular among businesses because it allows organizing a large amount of complex data without compromising performance.
Furthermore, Agile is a project management methodology used to divide complex projects into more focused stages so that teams can work in short, incremental phases to act quickly and manage changing priorities.
VI- Product Development Life Cycle
The product development cycle is the process of developing a product from its conception to its launch on the market, in other words it represents the phases through which a product passes, from the simple idea to its commercialization.
Typically, every new product goes through the following stages of development, each of which is the cornerstone of a successful launch, as illustrated in the following diagram :
1. Genesis of the idea and validation
In principle, the idea for a new product arises from the appearance of a problem to which an answer must be found or from the expression of a need to be satisfied.
It should be noted that ideas for new products or improvements to existing products can come from customers, stakeholders or employees.
2. Creating a product strategy and planning
Once the product idea is validated, it is necessary to implement the appropriate product strategy, which is the concise definition of the need that the new product meets and which results in the adoption of an action plan that describes the product’s functionalities and delivery schedules, taking into account the capacity of the resources.
3. Prototyping and Development
Time to market is critical in new product development.
During this prototyping stage, the team thoroughly researches and documents the product, while designing and developing a detailed business plan. This will allow the creation of a viable prototype of the product to be tested for compliance to better identify areas for improvement and potential omissions. Teams can repeat this process until the final design is approved and goes into production.
Moreover, more frequent testing and validation allows problems to be identified earlier in the product development cycle, reducing costs and risks. This final stage is an opportunity to verify that the product is satisfactory in all its aspects, from development to marketing, before offering it to the customer.
4. Launch
This step is the last in the process of bringing the product to market. Although launching a new product requires careful planning and delivery, the process of continuous analysis and evaluation through initially established success indicators is essential to ensure that it meets user expectations or to make improvements if necessary.
VII- What is the point of knowing the life cycle of a product
A product lifecycle is a critical approach for businesses looking to optimize their long-term profitability and growth. It allows the company to determine the software strategy to implement, as well as anticipate its logistics and storage needs.
Among its advantages:
- Help make the right decisions taking into account the stage of the life cycle;
- Implement the most effective actions, at the best time;
- Strengthen customer loyalty;
- Facilitate the choice of the appropriate marketing strategy to adopt;
- Improve product appeal and reputation;
- Contribute to the growth and profitability of the company;
- Optimizing the return on investment of product launches.
Conclusion
Understanding a product life cycle is essential to a business’s success, as it helps plan marketing strategy, predict market trends, and make informed inventory management decisions.