Product lifecycle management 101: definition, stages, and benefits

Every so often, news outlets will run stories about a popular product’s discontinuation. You may wonder why, as you see the product on shelves, it seems to be doing well.

Sometimes, these stories elicit backlash discouraging companies from following through, but that’s usually the exception, not the norm. Retiring a product may seem arbitrary, but companies only take such actions for a reason. The product has likely reached the end of its lifecycle, leading the company to take it out of circulation.

Each year, thousands of products, from cars to candy bars to software applications, reach the end of their product lifecycle, allowing new products to arrive. These decisions are part of what's known as product lifecycle management (PLM).

Understanding PLM can help you make better product development, distribution, pricing, and marketing decisions.

Fundamentally, PLM is managing everything about a product throughout its lifetime. 

The concept originated in 1931, when the founder of a New York advertising agency, Otto Klepner, articulated that all products have a lifecycle and that different marketing and management activities must happen at each stage. His model noted three stages of a product's lifecycle: Pioneering, Competitive, and Retentive. 

In 1957, a Booz-Allen Hamilton employee, Conrad Jones, expanded this model to five stages: Introduction, Growth, Maturity, Saturation, and Decline (which more closely resembles the PLM framework in use today).

During the latter part of the twentieth century, the American Motor Corporation (AMC) began using what we now know as PLM to produce vehicles. Their 1992 Jeep Grand Cherokee was the first product manufactured using PLM principles.

A capital-intensive industry like auto manufacturing would be an early adopter of PLM. After all, without careful management of each stage of the production and distribution process, cost overruns can occur at multiple stages and reduce overall profits. 

Moreover, without PLM, there’s a risk that products may remain on the market even after they've become unprofitable.

In labor-intensive industries and small businesses, employing PLM could be an excellent method for maximizing revenue and potentially outperforming the competition.

To grasp PLM’s full potential, you must delve into the four stages of a product's lifecycle and identify the corresponding activities that maximize success at each of these junctures.

Today, PLM incorporates a four-stage product lifecycle framework similar to the one proposed by Jones. These four stages are Introduction, Growth, Maturity, and Decline.

Introduction:

• Identifying a product: The first stage of the product lifecycle involves figuring out what product(s) to introduce to the market.

• Concept development: If a concept is lacking, it may be time to engage in one or several brainstorming sessions until an idea develops. 

• Market research: With the concept in mind, the next step involves refining it through comprehensive market research. For instance, let's take the scenario of an electronics company aiming to launch a new television. In this phase, product developers and marketers delve into various sources of existing customer data, including customer surveys, social media comments, and past sales data. Additionally, they analyze broader sources such as market and industry reports. The objective is to pinpoint the specific attributes and features that would ensure the success of the new TV.

• Refinement and prototyping: Once the new product development (NPD) team has a clear picture of the product they're considering, they'll work with engineers to develop a prototype and use focus groups and other market research tools to predict how much it will resonate with customers. 

• Iterative testing and feedback: Negative feedback will prompt the NPD team to make changes and retest the prototype with small groups of prospective customers. But the product itself won't be the only thing they test. 

• Comprehensive evaluation: NPD teams will seek input on every product element, from its packaging to pricing to the ads used to sell it in the market.

• Cross-departmental collaboration: When the feedback is positive about these elements, the NPD team will work with other business departments, such as Sales and Marketing, to formally launch the product to the public.

• Educating the public: If the product is in an entirely new or unknown category, part of the product launch and marketing efforts must involve educating the public about the category and the product’s merits.

Growth:

• Promotion focus: In the growth stage, businesses promote the product as much as possible.

• Diverse promotion strategies: Marketing teams may use everything from advertising to influencer marketing to get the word out. They'll work overtime to garner positive word-of-mouth, press coverage, referrals, and sales.

• Sustaining enthusiasm: A successful product launch will generate enthusiasm for the product and initial sales. However, marketing teams must use multiple strategies and tactics in the following weeks and months to sustain and even increase that enthusiasm to keep selling.

• Originality and innovation: Sometimes, the originality of a product can generate and sustain quite a bit of enthusiasm on its own. Think about the iPhone and the Tesla EV. Even with precursors on the market, both of these products were innovative to dominate their segments and expand the market for these products exponentially.

• Intellectual property protection: If the product is unique, a business's legal team will work tirelessly to enforce its intellectual property rights and prevent other companies from producing knockoffs during the growth stage.

• Product variations: Some product variations may happen during this stage—this can help sustain customer interest, address customer feedback, and deal with growing competition.

Maturity:

• Competitive market landscape: A product in the maturity stage has many competitors.

• Customer choice and marketing efforts: Now, customers recognize the value of the product category but have many purchasing options. Consequently, businesses must spend considerable time marketing and differentiating their products from those of competitors.

• Multiple competitive strategies: Some companies focus primarily on advertising why their product is better or engage in strategic pricing designed to undercut the competition. Or they may introduce new features that they believe will make their product superior. Many companies will engage in all three of these tactics.

• Growth rate decline: The brand may not yet see a dip in sales. But at this stage, they'll see that the product is no longer growing as quickly as it once was.

• Costs and profit margins: Next, operational costs are increasing, and profit margins are decreasing. The product is still profitable but noticeably less so.

• Sales invigoration strategies: Various strategies, such as product bundling and market modification, are leveraged to help invigorate sales.

Decline:

When a product declines, it’s headed toward the end of its lifecycle (also known as end-of-life).

Here are the indicators:

• Decreasing sales and market share: The product's sales and market share show a consistent decline.

• Deteriorating profit margin: The profit margin for the product is approaching zero or turning negative.

• Operational costs near or exceeding breakeven: Operational costs are approaching or exceeding the breakeven point.

• Diminishing customer retention: Customer retention rates for the product are trending downward.

• Price elasticity of demand: There is a higher price elasticity of demand for the product, indicating a notable change in demand relative to changes in its price.

• Declining customer demand in category: Customer demand is decreasing, impacting the specific product.

• Technological obsolescence: New technologies are reducing demand for the product, signaling a need for adaptation or transition.

Options for declining products:

• Selling off the brand: The company might explore selling if the product retains a well-known and respected brand name.

• Harvesting: Harvesting may come into play as a precursor of discontinuation. It involves strategically reducing expenses and maximizing revenue from existing inventory. The goal is to shift generated revenue to other, more profitable products.

• Discontinuation: When it's evident that a product is in decline, companies may opt to discontinue it.

PLM isn’t a universal strategy for product management. Instead, PLM is a framework of elements necessary to maximize revenue from each product. Leveraging these elements requires cross-departmental collaboration to control each stage appropriately:

Product data management:

A crucial PLM element is product data management (PDM). PDM involves managing all of the product data, from its designs to bills of materials to change orders. Keeping this data in a central, shared location facilitates product knowledge and collaboration across teams and helps maintain production standards. 

Supply chain management:

No matter what stage of the product lifecycle, a business must be able to procure the resources to make and distribute it efficiently. Tight supply chains are also integral to effective PLM. Consider a business with a unique product in a nascent market. If that company's primary supplier falls through, it could lose the opportunity to dominate and expand the market at its growth stage.

Continuous improvement:

To maximize product revenue, you must determine how to adapt your product and marketing strategies to changing market dynamics. Doing so often requires some product modification. It's essential for companies to continuously review customer data and use social listening and other marketing research tools to identify areas for product improvement to compete effectively, satisfy customers, and retain and grow market share.

Promotion and selling:

Over time, evolving market dynamics will require different product, promotional, and sales strategies. For example, a business might pair a high price point with heavy advertising in the introduction stage to fend off competition. However, they would use a different approach for a declining product when a high price point would likely further reduce sales.

Product portfolio management:

Another element of product lifecycle management is product portfolio management (PPM). It involves regular evaluations of a company's entire product portfolio to evaluate performance. Decision-makers use financial and other relevant data to determine product introductions and divestments and align those decisions with overall product performance. 

Pros

• Enhanced collaboration: PLM requires cross-departmental collaboration, bringing together teams from product development, advertising, PR, sales, logistics, and more.

• Data-driven decisions: Making informed decisions by leveraging data from various functional areas, leading to streamlined processes, reduced costs, and increased productivity.

• Faster speed-to-market: Tight product data management minimizes design and production errors, helping get products to market faster.

• Quality Assurance: PLM, particularly product data management (PDM), helps mitigate the risk of errors at every stage, ensuring consistently high-quality products.

• Strategic planning: PLM allows tracking each stage of product development, facilitating efficient supply and demand forecasting for cost savings.

Cons

• Cost and integration challenges: PLM software applications can be costly and challenging to integrate with existing systems, posing financial and technical hurdles.

• Resistance to change: The introduction of PLM may face resistance as it represents an organizational change initiative requiring employee adjustment.

• Training and complexity: Some PLM processes are complex, demanding training and incurring additional costs, which may be challenging for smaller businesses to absorb.

Here are ten of the most renowned PLM software options on the market:

Siemens Teamcenter: Known for comprehensiveness, Siemens Teamcenter is a robust PLM solution for efficiently overseeing product data and processes, helping holistically navigate the intricacies of the product lifecycle.

Dassault Systèmes ENOVIA: As a component of the 3DEXPERIENCE platform, ENOVIA fosters seamless collaboration throughout the product development journey.

PTC Windchill: Windchill manages product information and processes across the entire product lifecycle. Organizations leveraging Windchill benefit from a comprehensive toolset to navigate the complexities of product development.

Fusion 360 Manage with Upchain: This cloud-based product data management and product lifecycle management system provides a central data source, giving teams access to the data they need and the ability to collaborate efficiently, even for those lacking CAD licenses.

Arena Solutions: Arena Solutions offers a cloud-based PLM and QMS software to optimize processes and foster innovation in product development.

SAP PLM: Found within SAP's suite of enterprise solutions, SAP PLM seamlessly integrates into the broader organizational framework. This interconnectedness enhances its ability to support product development and collaboration, making it a valuable asset for businesses leveraging SAP solutions.

Aras Innovator: Unconventionally, Aras Innovator distinguishes itself as an open-source PLM platform. Organizations find flexibility in customizing and extending their PLM applications, making it a versatile choice for those seeking adaptability in their product lifecycle management approach.

Oracle Agile PLM: As part of Oracle's suite, Agile PM is tailored for the intricate dynamics of product value chains, providing organizations with a comprehensive toolset for practical PLM.

Infor PLM: Infor PLM (Optiva) helps companies navigate the complexities of product information management. Efficiency-focused, this tool aids in streamlining product development processes.

PTC Creo: Recognized for its 3D CAD capabilities, Creo extends its functionality to integrate seamlessly with Windchill for PLM. This integration facilitates a cohesive approach to product design and lifecycle management.

While operational challenges exist with adopting PLM, its benefits extend beyond its origins with auto manufacturing, finding applications in diverse industries such as oil and gas, apparel, and food & beverage. Businesses that successfully navigate the challenges often experience improved efficiency and strategic advantages.

PLM can help enterprises attain a comprehensive view of a product, from inception to retirement, with which they can plan more effectively. When employees use PLM processes and tools, businesses can make better product decisions, allocate resources more efficiently, and maximize revenue.

One industry that regularly uses PLM processes and technologies is the smartphone industry. Companies like Apple and Samsung use PLM to plan the lifecycle of each new generation of their devices. Integrating customer feedback into upcoming models, deciding when to retire older ones, and creating excitement for new releases can enhance product development and lifecycle management.

The most popular PLM software applications serve as repositories for a product's technical specifications and help aggregate data from other systems and functional areas to provide a company with complete visibility into a product. These applications facilitate communication and collaboration between departments to help businesses make better product-related decisions.

Agile refers to a commonly used framework for software development. The agile product lifecycle involves six stages similar to non-tech PLM: concept, inception, iteration, release, maintenance, and retirement. Adopting PLM for software development can help tech companies obtain many of the same benefits as non-tech companies, notably more efficient product planning, reduced expenses, and increased revenue and profit.