Product Lifecycle Phases: A Guide for Product Managers

Every product goes through a series of phases in its lifecycle, and the demands placed upon a product manager often vary depending on the product's stage. As a product manager, it's essential to identify, acknowledge, and understand a product's phase and its requirements to move it to the next step in its lifecycle.

In this article, I will try to define the four phases of a product's lifecycle, including Introduction, Growth, Maturity, and Decline, and highlight what product managers should focus on during each period.

Phase 1: Introduction

All products start somewhere, whether new offerings from an unknown startup, spinoffs, or brand extensions of a popular offering. Regardless of its origin story, a new product faces a particular set of challenges that require the attention of its product manager.

The main challenge of a newly-introduced product is generating demand. People are not used to buying this product, so the focus is on creating awareness and communicating its benefits to attract potential customers. This is also a critical juncture in confirming product-market fit. Market research and early trials may have corroborated your hypotheses, but validation comes when users actually spend money buying and using it.

Product teams must be nimble and reactive during this phase since there's often a short runway to determine whether the product has legs or if the company should cut its losses and move on. Different aspects of the value proposition should be emphasized, various features should be highlighted, and friction points should be quickly quashed to keep the newborn product viable.

Once the product gains traction, product teams must understand who uses it and which aspects of the product resonate most. Personas may evolve, and roadmap priorities can shift based on early usage data from real customers.

Product managers must explain what the product can do and why someone would want to use it as the in-house subject matter expert. During this phase, they should be a readily available resource to the marketing and sales organizations.

Phase 2: Growth

Once sales increase and the product has proven it has a market, it enters its growth phase. This is the stage when many companies invest heavily in marketing since they've identified which messages are resonating and which channels are best suited to reach the demographic that purchased early on.

Profit margins typically increase during this phase as economies of scale begin to kick in, and manufacturing costs decline per unit with higher volume and fewer defects. However, with more sales comes more competition, as other companies realize there's a valid market for the product and introduce their offerings.

Product managers must manage the balance carefully to remain competitively priced without giving away margin unnecessarily. They should identify who beyond their initial early adopters might want to purchase their product and which new features or changes are required to bring in that additional business. With this data in hand, they can prioritize the product roadmap to maximize sales during this land-grab growth phase.

Product managers must continually remember that some of that revenue and profit should be reinvested in product development. This is necessary to continue iterating and improving the product and to ensure it can continue scaling to support ever-increasing usage.

Phase 3: Maturity

Product maturity might sound like a great goal, but for a product, it's not always nearly as attractive as the growth phase. At this phase, new customer growth tapers off, competitors gobble up market share, and profits decrease as more companies claim a piece of the same pie.

Most who want to buy a product in your category already have, and the influx of new buyers to the market slows to a trickle. The biggest challenge now is retaining as much market share as possible and continuing to appeal to existing customers.

Product managers should focus on adding new features that improve the product's usability and user experience while maintaining competitive pricing. A shift in marketing strategy might also be necessary, focusing on loyalty and retention instead of pure acquisition.

At this stage, it's essential to listen to customers carefully and implement their feedback into the product roadmap. User research should be conducted regularly, and the product team should be prepared to pivot if necessary to accommodate customer needs and remain relevant in the market.

Product extension is a strategy that companies use to extend the life of a mature product by adding new features or variants. After a product has reached maturity, sales growth typically slows down or even starts to decline. To counteract this decline, companies can introduce product extensions to reinvigorate interest in the product and attract new customers.

Product extensions can take various forms, such as new features, colors or sizes, or packaging. For example, a smartphone manufacturer might introduce a new version of its flagship model with a larger screen or improved camera. Alternatively, a clothing brand might offer a new line of products with a new color or design.

Product extensions can be a cost-effective way to extend a product's lifecycle since they leverage the existing manufacturing and distribution infrastructure. They can also help increase revenue and profit margins by attracting new customers or convincing existing customers to upgrade to a higher-priced product version.

However, product extensions can also be risky if improperly executed. If the new features or variants do not resonate with customers or are too expensive, they could cannibalize existing sales or even damage the brand's reputation. Therefore, conducting thorough market research and testing the new product extension is crucial before investing in its development and launch.

Phase 4: Decline

All products eventually enter their decline phase as consumer demand dwindles and competition increases. During this phase, product managers must make tough decisions about whether to continue investing in the product or sunset it entirely.

If a product has reached the decline phase, it's often an indication that it's time to move on to something new. Product managers should consider retiring or repurposing the product in a new market segment where it may still have value.

Before sunsetting a product, however, it's essential to consider the existing user base and how to make the transition as smooth as possible. Communication with users is key, and a clear message should be communicated about the product's end-of-life status and any alternative products or services offered.

In the end, understanding the product lifecycle and the specific demands of each phase is critical for product managers. We must be agile and proactive, identifying shifts in the market and customer needs and responding with appropriate product improvements. By being aware of where our product is in the lifecycle, we can plan strategically and make informed decisions about resource allocation and product development.