When Kodak Film declared bankruptcy in 2012, you realized that the company that invented the digital camera had fallen in front of a technological revolution it had pioneered. This dramatic business case reveals a harsh truth: companies that fail to understand the product life cycle will eventually be eliminated from the market.

Some companies that understand this law are able to lay out the market three years in advance, while brands that ignore it are often stuck in a passive response. Today we will take a look at this classic theory together and see how some companies like Apple and Tesla play the game of product evolution.

Understanding the Product Life Cycle

Every product from being developed to elimination, just like human beings will go through infancy, youth, middle age to old age. The five stages of a product are: development, introduction, growth, maturity and decline. And people’s adolescence to calcium, middle-aged to health, products in different phases of the need for “nutrition” is completely different.

Take a classic example: P&G’s shampoo line. Hafez just launched when the main anti-dandruff (introduction period), when the market penetration rate reached 30% after the shift to anti-hair loss care (growth period), and now through the co-branded gift box to maintain market share (maturity period). The once popular Runyan Herbal series was eventually withdrawn from the market under the impact of competitors (decline).

Pre-Product Development

Tesla is experiencing “capacity hell” in 2018, with less than 2,000 units of Model 3 being produced every week. The story of Musk personally sleeping in the factory to supervise the war tells us: before the product is mass-produced, even the best design is just words on paper. At this stage, enterprises should consider three elements:

• Technical feasibility (can it be built)
• Market demand (whether anyone buys it)
• Cost control (can you make money)

Microsoft’s Zune player is the opposite. Although the sound quality was better than the iPod, it entered the market 4 years after Apple, and users had already formed the habit of using it. More fatally, its synchronization software often crashed – a technical flaw met with bad timing, leading directly to the abortion of the project.

Market Introduction Period

Remember how Xiaomi’s cell phone killed its way out of the competition in 2011? Lei played a psychological game with “hunger marketing”:

Only a small number of purchase qualifications will be released up front (creating a sense of scarcity)

• Allow enthusiasts to spontaneously disseminate the technical
• Parameters (reduce the cost of education)
• Positioning the mid-range market with $1999 pricing (price anchoring)

The core strategy of the introduction period: to validate the market with the smallest cost. Netflix is a master, from the DVD rental transition streaming media, first with a low price of $9.99 / month to attract fresh users, and then gradually increase the price when people develop the habit of catching up with the drama.

There are two key figures to monitor at this stage: early user retention needs to be >65% and each user needs to bring in at least 0.8 new users. New products need to focus their resources on core users.

High Growth Rate

During the 2020 epidemic, Zoom’s user base skyrocketed from 10 million to 300 million. But what’s less well known is that its tech team did three things two years ahead of schedule:

• Establishment of 17 data centers worldwide
• Development of a single conference room with a 10,000-person capacity
• Optimize video transmission at 56kbps bandwidth

Three gas pedals of market explosion:

• Over 40% natural traffic
• User acquisition costs continue to fall
• Channel partners proactively seeking cooperation

However, we need to be vigilant against the “false prosperity” trap: when the user growth rate > revenue growth rate, re-purchase rate declined for three consecutive months, the amount of customer complaints doubled, it is a danger signal.

Maturity

Coca-Cola’s formula hasn’t changed in a century, yet it continues to make money, thanks to three tricks:

• Turning sugar water into a happy symbol (brand value)
• Vending machines worldwide (channel control)
• Covering the full price range with different package sizes (product matrix)

Thus we can derive maturity offense and defense tactics:

• Main product margins maintained at 18-25%
• Extended products generate 20-35% incremental revenue
• User Lifetime Value (LTV) increased by more than 30 percent

Strategic Choices in A Recession

Nintendo’s transformation is textbook level. This playing card company, founded in 1889, has transformed toys, game consoles, hand games, and recently opened the health market by Switch + fitness ring when the card business declined. Its secret lies in doing demand grafting on the basis of existing technology. Specifically can be divided into the following 4 points.

• Harvest: Kodak Discontinues Film Cameras, Focuses on Medical Imaging
• Transformation: Nintendo transforms from poker factory to gaming giant
• Merger: Meituan merges with Dianping to unify local life
• •Phased Out: Microsoft Permanently Shuts Down Internet Explorer

Another idea is “exit”. When Toshiba found that the white goods profit fell below 5%, decisively sold the business to Haier, cash 53.7 billion yen to invest in nuclear power technology research and development. Sometimes it takes more wisdom to give up than to persist.

Product Lifecycle Revolution in the Digital Age

Adobe’s subscription-based change has changed the rules of the software industry. Previously sold every 3 years Photoshop software package, now collect $ 23.79 per month, not only cash flow is more stable, but also can continue to collect user data to optimize the product.SaaS model allows the product lifecycle curve from the peak to the plateau.

The Notion documentation tool is even more radical – turning users into product co-creators. Its template marketplace enables ordinary users to develop functional modules, and the platform takes a 40% cut. This crowdsourcing model allows for automatic iteration of product features and a life cycle 3-5 times longer than traditional software.

Practical Toolbox

If you’re a product manager or are developing a new product, then hopefully you’ll take a look at some of the hands-on tools we’ve put together for you that will hopefully help make your product a success.

4 questions to consider:

• Market penetration of products
• Speed of Competitive Follow-Up
• Index of changes in user needs
• Value at risk of technology substitution

Three key indicators

• Boston Matrix: Positioning Products in the “Market Growth – Market Share” Quadrant.
• NPS value: if the willingness of users to recommend is less than 30%, it is time to consider product upgrades.
• LTV model: figure out the lifetime value of a user to know how much to invest in customer acquisition costs.

Critical Decision Time Window:

• Introductory period to growth period: start expanding production when monthly subscriber growth is >15%.
• Growth to maturity: differentiation is initiated when there are 3 or more competitors in the same category.
• Mature to Decline: Transition initiated when natural traffic declines >8% for two consecutive quarters.

Future Trends

Recurrent Mode

IKEA’s recently launched furniture buyback program essentially turns a linear life cycle into a circular model:

 Purchase → Use → Recycling → Refurbishment → Resale

 This model not only meets environmental requirements, but also reaches price-sensitive customers through second-hand transactions, opening up a new growth curve.

“Flash Product” Model

There is also the TikTok popular “fascia gun” average survival cycle of only six months, but the smart business developed a “flash product” model:

• Complete market validation in 1 month
• Profit recovery in 3 months
• Gradual stock clearance in the last 2 months

Conclusion:

Product lifecycle is never a multiple choice question, just like when Nokia’s feature phone was in decline, while Apple’s smartphone was exploding. The real masters are doing “time arbitrage” – cultivating the next growth point in the maturity of existing products. Remember: there is no such thing as a bestseller forever, only an evolving product can bring more rewards.