Whether a product is a sophisticated computer or a bar of soap, it likely had a long path from initial concept development to product launch. Specifically, it went through the product development life cycle—a process that starts with idea generation and ends with a public release. Here’s an overview of the product development process and the factors that may affect it.
What is a product development life cycle?
The product development life cycle can be broken down into seven steps that track how a product goes from an idea to a viable commercial good. It starts with an initial product concept followed by market research, planning, prototyping, sourcing, assessing costs and prices, and a commercial introduction.
Product development life cycle vs. product life cycle
The product development cycle is a precursor to a longer process called the product life cycle. The product development life cycle includes every stage from idea generation to commercialization. The product life cycle picks up where the development cycle ends, describing the product’s progress from introduction to the market to its eventual decline and even discontinuance.
The product life cycle has four stages. In the introduction stage, the product comes to market. In the growth stage, marketing campaigns ramp up, the customer base expands, sourcing and manufacturing become more efficient, and the product may be tweaked for improvements. Next, in the maturity stage, the product reaches its maximum market share. The cycle concludes with the decline stage, when the product line may wind down or be sold off to another company.
The 7 stages of the product development life cycle
The product development life cycle occurs over the course of seven stages. Each product development stage involves specific milestones as a product progresses from a concept to a commercially available item.
1. Idea generation
In the idea phase, a product development team pitches product concepts. They might pursue a competitive advantage by plugging gaps in the marketplace and addressing customer needs that no existing product seems to fulfill. Product teams may use this stage to consider limiting factors such as sourcing and production costs, but this stage places concepts front and center.
2. Market research
In the market research stage, the development and marketing teams identify a target audience for the new offering. Your market research can start with assumptions about what potential customers want. You can follow with concept testing, where you present product ideas to a test audience and solicit customer feedback. The goal is to make sure there really is a market for your products. Established companies often target their existing customers when rolling out new products because these customers are already in the business’s sales funnel.
3. Planning
In this stage, a company’s product management team rolls out a product roadmap. This aligns all stakeholders, from the design and development teams to the sales and marketing teams, around a common plan for bringing the new product to market. The teams consider the development strategy for making the product efficiently and affordably, as well as the marketing strategy for placing it in front of the right types of customers.
4. Prototyping
The product development cycle next moves on to prototyping and product testing. Prototypes can be expensive, but they’re necessary to evaluate and improve your product before you commit to full-scale production. Whether you make a DIY prototype or order one from a manufacturer, you’ll need a product that has enough functionality to mimic real-world usage. This stage also involves product testing to ensure safety and customer satisfaction.
5. Sourcing
Once you have a good prototype, you’ll turn your focus to the supply chain: the raw materials, vendors, shipping logistics, and resources needed to create your product on a commercial scale. This stage should also include a plan for warehousing and shipping your finished products. For larger companies, supply chain logistics require a dedicated project management team.
6. Costing and pricing
Costing is the process of estimating your cost of goods sold. This includes expenses such as raw materials, factory equipment, and labor. You’ll also factor in the logistics of shipping, storage, and import fees if you use overseas production. Once you’ve fully accounted for your costs, you’ll develop a pricing strategy that lets you make money over the long run.
One common pricing strategy is the cost-plus method, which simply adds a fixed percentage on top of costs. Alternatively, many startups rely on competitive pricing and aggressively discount their products to gain market share. This can mean losing money at first, but if the company achieves its desired market growth, it can eventually make more money via larger sales volume.
7. Commercialization
The product development life cycle culminates in the commercial introduction of your product. At this point, you are producing the item at scale. You may be shipping it to retailers or selling it directly to consumers via your ecommerce store. Your marketing plan is now up and running. Commercialization also launches you into the full product life cycle—the introduction phase, growth phase, maturity phase, and decline phase—which offers many opportunities for product improvements, marketing outreach, and customer service.
What factors can affect the product development life cycle?
Even the most seasoned product development teams can be knocked off course by outside factors beyond their control. These include:
- Negative customer response. Your concept testing or prototyping may reveal that customers don’t like your product. You’ll have to decide whether to make improvements or scrap the product.
- Supply chain limitations. You can only manufacture a product at scale if you have access to an adequate supply of raw materials, equipment, and workers. Without them, you may need to alter the product design or suspend manufacturing.
- Shipping issues. If you’re sourcing goods or parts from different regions, you’re at the mercy of shippers. Failure to receive items on time and at a reasonable cost can derail production, sales, and deliveries.
- Misaligned priorities. A successful product launch requires alignment between your development and design teams. Your products should be functional, aesthetically appealing, and created with a specific target market in mind. Make sure your teams share these priorities.
Product development life cycle FAQ
How long does the product development life cycle typically take?
A product development life cycle can take from a few months to several years. It progresses most rapidly at established companies that make iterative changes to existing products and sell to a similar customer base. It can take much longer if a startup is developing a product from scratch and lacks connections to the supply chain or customer base.
Do businesses typically have a set budget and timeline for the product development life cycle?
Yes. Product managers set budgets and timelines for each stage of the product development cycle. These documents align all departments around a common objective and share expectations.
Does the product development life cycle typically involve multiple iterations of each stage?
It is possible for a product development lifecycle to involve multiple iterations of a stage. For instance, an initial prototype may fail to impress potential customers, which means that the product team will repeat the prototyping stage. Or, a product design may change, which then necessitates a search for different suppliers. In other cases, the product development cycle unfolds smoothly, and no stage needs repeating.
How does customer feedback influence the product development life cycle?
Customer feedback plays a crucial role in the product development life cycle. Each phase of the cycle is based around creating a viable product that will last for years in the marketplace. If customers don’t respond well to a design, it bodes poorly for the product’s long-term success. Therefore, companies take customer input very seriously and tweak their concepts and prototypes to match market interest.
Is it important to continually evaluate and improve a product after its launch?
Yes. When the product development life cycle ends, the product life cycle is just beginning. Businesses monitor their products after they launch with an eye to durability and safety. They also consider customer feedback, whether that’s suggestions for improvement or unexpected use cases. By continually adjusting a product to address durability, safety, functionality, and customer satisfaction, companies can increase the lifespan of the product line.