Dec 23, 2022
8 min to read
What is product lifecycle management? Learn how it can help you improve your products and your bottom line.
Product Lifecycle Management
Our lives are full of cycles. The seasons come and go, bringing change each year. The economy runs in cycles, from bear markets to bull markets and back again. Businesses go through predictable phases of growth and decline.
Many of the cycles in our lives we do not control. But there is one that businesses can control: the product lifecycle.
As globalization drives down prices, regulations increase complexity, and the economy shifts in unpredictable ways, it’s time to focus on product lifecycle management as a way to improve your bottom line.
Product lifecycle management (PLM) is the process of directing, supervising, and handling a product as it moves from the early stages of design to the go-to-market phase, and eventually to retirement. Effective PLM can help you make better business decisions across the board, creating higher-quality products, pricing and promoting them correctly, adding features, expanding to new markets, providing customer service, and eventually deciding if and when to retire the product.
PLM can be a highly complex form of data management. It includes product design files, supply chain information, customer management, and sales information. It also involves multiple departments, like design, engineering, and sales, thousands or millions of SKUs, and multiple global locations, especially when it comes to eCommerce product management for larger enterprises.
PLM is especially important for manufacturers, who need to design, engineer, and market their own products, as well as the distributors and retailers who then work with those products. As more and more of these organizations move online and embrace the digital transformation, product management for eCommerce becomes even more important. When you sell online, you need to manage the lifecycles of thousands of products in real-time. Otherwise, you can’t deliver the product experience—and therefore the customer experience—that will keep your buyers coming back.
This is where product lifecycle management software can help. A good PLM system will incorporate your product data into a single database that can then be used throughout the entire lifecycle. It can import data from a variety of sources, including your enterprise resource planning (ERP) software, and automate many tasks, so you can maximize the profits from every product.
The traditional way of looking at PLM is the five-stage model by Theodore Levitt. Levitt first introduced this model in 1965 in the Harvard Business Review, envisioning the classic bell-shaped curve that would soon be taught in business classrooms around the world. Levitt’s five stages were:
The development phase includes ideation, concepting, and design. It includes competitor and market research that influences the ultimate design of the product, as well as validation, analysis, prototype development, and field testing. Consumer feedback is gathered and changes are made until the product is finalized.
The introduction phase includes production and going to market. Supply chains are determined, production methods are optimized and then scaled, and distribution channels are found and activated. The introduction phase is heavy on marketing and advertising, but low on sales, making it the most expensive phase.
The growth phase is all about increasing demand for your product and scaling your operations. Maintaining and expanding your reach, ensuring your product is in stock, pricing it correctly, providing customer service, establishing better distribution, and differentiating yourself from your competitors are all important during the growth phase. In the eCommerce product lifecycle in particular, the growth phase can occur rapidly.
The maturity phase is usually the most profitable. You have attained a high market share and perfected your pricing and distribution strategies. However, many consumers have now bought your product, and you may be reaching market saturation. The focus in this phase is to increase customer loyalty and add new features to give them a reason to continue to buy your product.
The decline phase occurs when the market becomes too competitive, the technology is outdated, the market is too saturated, or customers simply lose interest. You’ll need to manage the retirement of your product, including scaling down production, selling remaining units, and continuing to provide customer service and alternative products to your loyal customers.
The answer to “What is product lifecycle management?” isn’t always so straightforward. Since Levitt published the traditional product lifecycle management model, business leaders and economists have been tweaking it. Some leave out the development phase because it occurs behind the scenes. It also doesn’t apply to some eCommerce product management, especially for retailers and distributors who do not manufacture their own products.
Forty years after Levitt first published his lifecycle model, Harvard business professor Youngme Moon wrote another article in the Harvard Business Review: “Break Free from the Product Life Cycle.” She argued that by embracing the traditional model of product lifecycle management, businesses may be accepting the stages of maturity and decline when they don’t need to. Many businesses can reposition their products to either move them more quickly into the growth phase or cause them to revert back to the growth phase from the maturity phase.
With the introduction of product lifecycle management software, it’s easier than ever for businesses to collect, organize, and manage their product data. This in turn lets them better predict the product lifecycle, and prolong the growth phase or even revert back to it. The increasing complexity of the eCommerce product lifecycle means software is even more important.
When used effectively, PLM has positive effects on your bottom line and is an essential part of your digital ecosystem. With the right knowledge, captured at the right time, and shared with the right people, organizations can facilitate collaboration and make better decisions and predictions throughout the product lifecycle. That means you can:
Product lifecycle management examples can be found in nearly every industry, especially the automotive and aerospace industries, which were some of the first to adopt the model.
One modern example in the automobile world is Tesla. The company introduced its first car in 2008 and the famous Model S the following year. As a pioneer in the electric car space, Tesla’s introduction phase was characteristically slow. The pricing was premium and demand was low. With the release of the Model 3 and its more affordable pricing, Tesla entered the growth phase, where it currently stands.
Tesla currently dominates its competitors. The company sold nearly 500,000 cars in 2020 and nearly 910,000 in 2022, an impressive growth rate. They are also constantly introducing new features to the same models to help prevent their product from reaching the maturity stage too quickly.
The strategy of introducing new features and retiring others is common today in technology and eCommerce product management. This helps them stay in the growth and maturity phases as long as possible. We’re all familiar with brands like these: Apple, as well as other smartphone makers, are some of the most well-known.
Turning your company into the next Tesla takes more than an innovative product and product lifecycle management software. The product lifecycle is complex and many markets are already very competitive, which makes it difficult to reach the growth stage. Following some product lifecycle management best practices can help.
So what is product lifecycle management? Ultimately, it’s a way to ensure you’re selling your products efficiently. By creating quality products, setting the right prices, and ensuring that you have items in stock, you’re not only saving your business money, but creating an excellent customer experience.
At Akeneo, our product information management (PIM) software is all about providing an amazing product experience that leads into the best customer experience you can offer. Learn more about our PIM, as well as the differences between PIM versus PLM, then contact us if you have any questions. We’re always here to help you sort out what you need.
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