The product development life cycle is an essential tool, no matter your role. If you’re a manager, marketer, engineer, or designer, this blueprint provides you with crucial direction to best develop your digital product and see success when it reaches the market.
In this post, we’re going to overview the concept of digital product and steps in the product life cycle.
Defining the product life cycle
Before we explore 5 key steps of the product development life cycle, let’s first define what a product life cycle is.
A product life cycle is a well-documented and predetermined set of stages that all commercial products will eventually go through. They are:
- New product development
There is no product in the world that hasn’t gone through this very life cycle at some point in its existence. And in order to get the most out of your product, you need to grasp these vital things about the life cycle:
- While products aren’t alive, they still have a limited life span. Unless they’re taken through the life cycle from start to finish, they’re going to die a sudden death. It’s a harsh but essential truth
- Each stage will present you and your company with a distinct array of challenges to overcome, and opportunities to take advantage of
- There’s no one size fits all department that can handle the life cycle; it requires input and effort from a wide range of teams, such as engineering, design, marketing etc. One of the key ingredients of success is including the right team at the right time
5 steps of digital product development cycle
Step 1 – New product development
The first stage or step of the product life cycle is the development stage. It’s also the most challenging one. Before you can produce a product and market it, you need to research, test, and validate it.
We can break this stage down into separate components.
Research: Perform market research and competitor analysis to identify if your product has the potential for success and offers any unique value to likely customers. It’s vital also to create a business case which validates your product.
Also, you should clearly understand who and how will build your product, say, for software development whether it’ll be a hired company or own developers.
To know more about outsource rates, check out this article.
Development: After understanding your customers’ problems and needs, you can outline an MVP or first release of your product. Before introducing it to the market, it needs to be tested with your target audience until it passes both alpha and beta testing.
Alpha testing is a type of acceptance testing that is typically performed by in-house developers or by external testers hired by the organization developing the software. Beta testing, on the other hand, is a type of testing that is performed by end users or customers.
In recent years there is a growing tendency of implementing automation of some processes that can bring benefits to software development. End-to-end testing, for instance, is a type of alpha testing that focuses on functionality from the end user’s perspective.
In end-to-end testing, all the components and modules are tested together to verify whether they work properly as a whole system. When this process is done automatically it is less prone to errors and simplifies the testing process.
Step 2 – Introduction
It’s during this stage you’ll release and promote your product. A key factor of your success will be how well you can reach the right people. It’s easy to fall into the trap of merely trying to reach as many people as you can. But if you want to see long-term success, you’ll need to go after your target audience. They’re the ones with problems and pain points your product can help them with.
Depending on the competition you’ll be facing, there are two distinct pricing strategies you can apply:
Penetration: The penetration pricing strategy‘s goal is to set your prices as low as possible at launch to undercut your competitors. The idea is to rapidly create awareness by essentially ‘disrupting’ the current market. Some companies are even willing to introduce their product at a loss, in return for gaining a large portion of the market at the beginning.
Skimming: This pricing strategy is very much the opposite of penetration – it involves initially setting your prices very high and then lowering them as time goes on. While you can generate more enormous profits with this strategy, it only works if there’s low competition in the market.
Step 3 – Growth
It’s during the growth stage you should see an increase in customer acquisition, retention and profits. It shows that your product is valid, especially when competitors start developing their own similar product to compete with yours.
During the introduction stage, your marketing strategy would have been primarily orientated towards acquiring new customers. Now, it’s time to ensure you’re also establishing your brand presence. Branding your product and business helps customers choose you over any competition.
Step 4 – Maturity
One of the toughest stages to face during a product life cycle is the maturity stage. You can recognize it as you’ll see your sales beginning to flatten slowly. While it may not be noticeable at first, it’s hard to miss the flattening trend line on your visual sales graphs.
This is the time to switch gears from raising awareness to highlighting your products’ USPs, showcasing how it differentiates from similar competitive products and focuses on innovation. It’s also vital during the maturity stage to learn from any mistakes made during the introduction and growth stages to improve and enhance your product.
Companies who fail to successfully manage this stage effectively will reach the next step quicker than expected.
Step 5 – Decline
It’s during this stage you’ll see the sales of your product start to drop. It could be because you’ve reached your market cap, I.e., everyone who needs or wants your product already has it, or a better, cheaper competitive product was released which customers prefer over your product.
In a perfect world, to prevent reaching step 5, you would restart the product life cycle to breathe new life into your product and extend its competitiveness.
Your company may decide it’s too costly to restart the product life cycle and choose to kill the product to allocate resources elsewhere, e.g. develop a new MVP. Startups who fail to prevent the declining stage often run out of funds because they can’t compete with larger, more established companies.
The product development life cycle provides you with a useful blueprint to follow to help ensure your product is fit for the market and help it succeed during its ups and downs.
While there are no guarantees you’ll see success at each stage, using this process will certainly help increase your chances of combating the unexpected and extending the lifespan of your product.