The Product Strategy and the Product Life Cycle
Developing a winning product strategy is hard. Keeping the strategy relevant and achieving continued product success is even harder. In this article, I discuss how you can use the product lifecycle model to address this challenge. I explain how the model can help you make the right strategic choices, focus and evolve the product strategy, and effectively grow the product.
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A Brief Introduction to the Product Lifecycle Model
As its name suggests, the product lifecycle model describes how a product develops over time. It assumes that it has a life much like a living being. A product is born or launched; it then develops, grows, and matures. At some point, it declines, and eventually, dies. Consequently, the model shown in Figure 1 has five stages: development, introduction, growth, maturity , and decline.[1]
Take Apple’s iPod as an example. The product was launched in 2001 as the company’s first consumer music gadget in a market, which at the time was dominated by products like the Nomad Jukebox from Creative Labs. Making the iPod Windows-compatible and launching iTunes helped the product bridge the chasm shown in Figure 1, achieve product-market fit, and enter the growth stage in 2004.[2] iPod sales reached their peak in 2008, which also marked the start of the maturity stage. In 2009, sales started to decline. In 2014, Apple discontinued the original iPod and in 2022, the company finally retired the entire product line.[3]
But that’s not the only way the life of a product can unfold. Instead of accepting maturity and letting your product age gracefully, you can try to rejuvenate it and extend its life cycle. Figure 1 therefore contains a second, smaller life cycle, which piggybacks onto the first one. Products can, in fact, benefit from repeated life cycle extensions. Take the iPhone as an example, which was first launched in 2007 and whose life has been prolonged multiple times, for instance, by offering new and enhanced features like Face ID as well as different models for different segments.
In addition to the five stages, Figure 1 contains four important events in the life of a product:
While the curve in Figure 1 is roughly bell-shaped, your product’s actual trajectory may differ significantly: It may be much steeper or flatter. The life cycle model is hence not a predictive tool that forecasts the value a product will generate. It is a sense-making one that helps you understand where a product is in its life cycle. To leverage it, you have to define the value your product creates and track it over time. The former is done by discovering an effective product strategy ; the latter is achieved by using the right key performance indicators (KPIs) .
Four Benefits for Making the Right Strategic Product Decisions
The product lifecycle model offers four specific benefits to help you make the right strategic decisions for your product.
Let’s now take a closer look at how the life cycle stages influence the product strategy and how the strategy might evolve across the life cycle.
The Product Strategy in the Development Stage
When you set out to create a new product, your strategy should focus on the needs of the early market—the innovators and early adopters. These are individuals who are happy to use an initial, good enough product (MVP) and put up with a few teething issues as long as they will gain an advantage from using it.
Take the original iPhone, for instance. Apple targeted a focused market segment—consumers who had owned or used Apple products before and who could afford to spend up to $500 on a new phone. This allowed the company to develop an innovative product in a comparatively short time frame without having to match all the features competitors like Blackberry and Nokia offered.[6]
A great way to discover a new product strategy is to follow an iterative process like the one shown in Figure 2.
Start by capturing your initial product strategy using, for example, my Product Vision Board . Then systematically rework it until you’ve addressed all major risks it contains, for instance, that the main need is not strong enough, and you’ve collected the relevant data to show that the target group, needs, business goals, and standout features are likely to be correct. For more guidance, see my article Product Strategy Discovery .
The Product Strategy in the Introduction Stage
Once you’ve launched the MVP and entered the introduction stage, track the product performance using the right KPIs . If the response is poor, investigate the causes and determine the right corrective actions. This may involve a drastic strategy change—a pivot. Take YouTube as an example, which evolved from a video-dating site to a video-sharing product and the Apple Watch, which was launched as a lifestyle gadget and iPhone accessory and has morphed into a health and fitness device.
If pivoting is not an option or if you have already pivoted once or twice, then you should consider killing your product. While this might sound rather drastic, it frees up resources and avoids wasting time, money, and energy. Take, for example, Google Wave , a messaging and collaboration tool launched in 2009. Due to its lack of success, Wave was discontinued at the introduction stage about a year after its launch.
If you see a positive market response to your newly launched product, then that’s great. But don’t make the mistake of optimising it for the early market. Instead, shift your focus to the mainstream users/customers and their needs. This requires you to change the product strategy and rework its sections including the target group and needs.
You might also have to add or enhance features, modify the architecture and technology stack, and update the underlying business model to bridge the gap or chasm between the introduction and growth stages. Take the iPhone again as an example. To enter growth, Apple offered third-party apps and started selling the product in their stores and online shop—to name just a few of the changes.
The Product Strategy in the Growth Stage
Once a product starts to generate significant value, it has achieved product-market fit and entered the growth stage . You should now adapt the product strategy to sustain the growth and attract more users and customers. This does not come without challenges, though. Here are two common ones:
First, you now have a product that serves a larger, more heterogeneous audience with diverse needs, that is becoming increasingly feature-rich, and that requires more teams to develop it. To address the challenge, you might unbundle your product, spin off one or more features, and turn them into a new product—as Facebook did with Messenger back in 2014. Alternatively, you could create product variants and develop specialised versions of your product for a specific market segment, think of YouTube Kids, for example. (I explain both techniques in more detail in my book Strategize .)
Second, competitors are likely to start copying some of the product features. Think of what happened in the smartphone space: The design of the original iPhone, which was once a major differentiator, has become the standard for all modern phones. You’ll therefore have to fend off competitors and keep the product clearly differentiated. A great tool to achieve this is the Strategy Canvas , which originated in the Blue Ocean Strategy .
The Strategy Canvas in Figure 3 ranks the first iPhone against its rivals, including the Nokia N95 and the BlackBerry Curve, using twelve key factors. By assessing to which extent the iPhone and the competitor products fulfil the factors, two lines are created. The fact that they diverge shows that the first iPhone was very well differentiated.
If you apply the Strategy Canvas to your product and you get a similar picture, then that’s great. But if the lines are closer or even overlapping, you’ll know that your product is no longer effectively differentiated. You’ll consequently have to find ways to make it stand out again—as Apple did in 2017, for instance. the iPhone added Face ID allowing users to unlock their devices using face recognition technology.
The Product Strategy in the Maturity Stage
Despite your best efforts, growth will eventually start to stagnate, and your product will enter maturity. When this happens, you face an important strategic decision point with two options.
Your first option is to extend the life cycle. This requires you to rework the product strategy. Say you decide to achieve more growth by serving a new market or market segment or by addressing a new need, you would then change the target group and modify the needs that are captured in the strategy. If you want to enhance the product’s capabilities and add new wow features, update the product section of the strategy—assuming you use my Product Vision Board .
Be aware that a bigger strategy update is likely to introduce new risks. You should therefore follow the process shown in Figure 2 and systematically address the risks before committing to the strategy.
Your second option is to let your product mature and use it as a cash cow . Such a product creates plenty of business benefits, but it requires only a moderate to low investment. This option is advisable when a life cycle extension is not required. This means that you have other products in the pipeline, which will eventually replace your product, as I explain in the article The Product Portfolio Matrix .
If you choose the second option, adapt the product strategy, for instance, by adjusting the business goals and introducing a profitability target. As you now adopt a more conservative mindset, play a defensive game, and focus on incremental enhancements and bug fixes, the product strategy should be comparatively stable. However, you should still practise continuous strategizing , track the product performance, monitor the market and competitors, and regularly check if the current strategy is still working.
The Product Strategy in the Decline Stage
Even if you do a great job at looking after a mature product, one day it will enter the decline stage—the value it creates will start to decrease. Take the original iPod, the iPod Classic, as an example again. The product once dominated its category and was an important revenue source for Apple. After years of declining sales, the company retired it in 2014.
Once your product has entered the decline stage, you have again two main choices: Your first option is to accept it as the final stage in your product’s life. You should not expect any changes to the product strategy at this point unless you decide to sell or license parts of the product, which will require you to adjust the business goals.
Alternatively, you might want to attempt “resurrecting” the asset by re-positioning it as a niche product. Take turntables, for example, which have staged a remarkable comeback after the entire product category had virtually become extinct. If you choose this option, rework the product strategy and change the target group, needs, business goals, and standout features. As you will have made bigger changes to the strategy, validate it using the process shown in Figure 2.
Summary
Table 1 summarises the five life cycle stages and my product strategy recommendations.
As Table 1 shows, the product strategy work starts with the development of a new product and ends when a product is discontinued. It’s not confined to a phase or stage. What’s more, the product strategy is not static or fixed but adaptive. It has to be regularly reworked and adjusted. The strategy work is therefore best understood as a process or workstream that has to be attended to continuously to ensure that a product generates the desired value on a continued basis.
You can download the following infographic , which contains Table 1 and the life cycle model shown in Figure 1 by clicking on the image below.
Learn More
To learn more about the product life cycle and effective strategic product decisions, attend my Product Strategy and Roadmap Training Course and read my book Strategize .
Contact me if you want me to teach the course to your team or if you need help with your product strategy.
Notes
[1] This article offers a brief overview of the life cycle model. I explain it in more detail in my book Strategize . Note that the development stage includes the initial strategy and product discovery effort. If you’re interested in the history of the model, read the article “Exploit the Product Life Cycle ” by Theodore Levitt, who first described it in 1965.
[2] Geoffrey Moore discusses the challenges of transitioning from the introduction to the growth stage in his influential book Crossing the Chasm .
[3] See my book Strategize and https://en.wikipedia.org/wiki/IPod .
[4] The term product-market fit was introduced by Marc Andreessen who suggests the following heuristics to define it: “The customers are buying the product just as fast as you can make it—or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it.” This description supports my view, which equates product-market fit with entering the growth stage.
[5] I explain the correlation between strategizing effort and life cycle stages in more detail in the article How much Product Strategizing is Necessary?
[6] The first iPhone had no video recording capability, no copy and paste , and only basic email integration, for example.
[7] See Strategize , p. 109.
[8] See Strategize , pp. 82.
This article was first published on romanpichler.com .
Agile Coach | Product Management | AI and Prompt enthusiasts
1 周Informative and insightful article. Examples are apt which is making to understand the article better. Thanks for sharing Roman Pichler
creating products to be proud of
1 周Roman Always relevant. And with a clarity of thought.