What is life cycle management?
Businesses are usually at the forefront of innovation and growth. They are the ones who do the research or pay someone else to do it for them. Either way, without their support the economy would come to a halt. However, in its path to evolve, grow, and push the boundaries of conventional innovation and services, mistakes are often made along the way that hurt not only the product and services in terms of quality but also the sustainability of the business. In order to avoid these issues, it is best to plan ahead and use a business management concept that helps improve the end product and the sustainability of the business and its associated value chains. One such business management concept that can be used is life cycle management.
What is life cycle management?
Life cycle management is known by different terms in different industries as software development life cycle or even product life cycle management. While there are different names for it, the core principles have remained the same.
The three core components that drive life cycle management system are – the management which modifies the decision making process based on environmental issues, the engineering core that takes charge of the impact the product can cause on the environment, and the leadership whose job it is to inculcate a culture within the organization that can support the life cycle. Thus, using these three components, life cycle management helps develop the business processes further while at the same time aiming to achieve sustainability and long-term achievements.
Another important aspect to look at in life cycle management is its value chain. Each step involved in the design, development, and deployment of a product or service, provides value. These steps interconnect and are called value chains. It’s important to identify these value chains since LCM can be applied for an individual product or service or to the entire working process of the company. Each of these value chains can have a lasting impact on the sustainability of the business or product and can be looked upon differently based on the scale at which LCM will be applied. This will identify the potential areas that can be problematic, whether ecologically or socially. In addition, LCM can improve the quality of the product, improve the design and reduce costs to develop the minimum viable product. This can also contribute to identifying more markets to cater to thereby increasing the revenue.
Key phases of life cycle management
To create successful new products, a company must understand its customers, markets, and competitors. This is achieved by following a particular set of phases that are known as the project life cycle.
Market introduction stage
This is the first stage in the project life cycle and it is here that the product is first unveiled in front of the customers. The customers will then start buying and the revenue increases, however in this stage, the net income post the cost of product development is not very high. The introduction of a new product creates a new market, where competitive products may not exist, hence most consumers might not be aware of the product and its use. So in order to become the talk of the town, a lot of the initial investment would be spent on advertising to generate awareness. During the first distribution, the features and quality of the product will be judged as the quality is not well known based on which the final market cost will be determined.
In this stage, the product has an established market and consumers. Brand awareness is increasing as well as the number of consumers leading to a higher number of dedicated buyers. At the same time, there are competing brands being released into the market which might possess newer features to attract consumers. This can lead to more competition as well as a reduction in the selling price of the product or services.
The next stage of the project life cycle is the maturity stage. Here, the cost of the products is reduced due to increased movement of the product and competing products in the market. This also leads to changes in the market as less successful products from competitors are removed from the market. As a result, the sales drop, even the cost of gaining new buyers might become higher than the consequent profit. By focusing on improving the inventory and distribution channels the product can be supplied to the consumers and the cost of marketing can go down.
Market Saturation Stage
The last stage is the market saturation stage where the market has become saturated with the product leading to a drop in sales. The marketing for the product can now be reduced. The product line can still be run, but at the end of its cycle, there needs to be planning to release either a better alternative or an improved product as the current production cost does not generate enough revenue for it to be sustainable. The sales and demand data in addition to the product development research will then benefit this newer product line.
In conclusion, a business can succeed and create its own niche if it has a properly designed life cycle management plan that can ensure a sustainable business. At the same time, it will also help reduce the time to market for the product, increase revenue, and reduce development costs.