4. Product Life Cycle

In this section, we will discuss the product life cycle and how understanding this cycle is essential for effective product management.

The Technology Adoption Curve

To comprehend the product life cycle, it’s helpful to first understand the technology adoption curve. This curve, shaped like a bell, illustrates how technology is adopted over time by different groups of people. The curve is divided into several categories:

Innovators: These are individuals who adopt a new technology simply for the pleasure of experimenting with something new.
Early Adopters: These people enjoy using new technology, but they require it to have a practical purpose.
Early Majority and Late Majority: These groups represent the largest portion of the population, nearly 68%, who adopt technology once it becomes more mainstream.
Laggards: These are the last to adopt a technology, only doing so when it becomes universally accepted and unavoidable.

The S-Curve of Technology Adoption

If we integrate the bell curve over time, we get an S-shaped curve, commonly referred to as the S-curve of technology adoption. This curve highlights the three main phases of a product’s life cycle:

Innovation: The product is being developed and tested in the market.
Growth: Once the product gains traction, it enters a period of rapid market adoption and expansion.
Maturity: The product reaches its maximum market penetration and the growth slows down.

Real-World Examples

The S-curve is observable in the real world. For instance, the adoption of television in the United States followed a perfect S-curve, with rapid growth after its introduction, eventually reaching market saturation. Other technologies, such as electricity, airplanes, and telephones, have also followed similar patterns.

In the realm of digital products, PCs, the internet, and mobile phones are in the early stages of this growth phase, highlighting the ongoing expansion of these technologies.

One interesting example is the adoption of “.br” domain registrations in Brazil. The adoption started slowly, grew rapidly around 2010, and appeared to reach maturity by 2016-2018. However, the COVID-19 pandemic in 2020 gave it another boost, demonstrating the difficulty in pinpointing exactly when a product has reached maturity.

The Chasm

However, not all products successfully transition from early adopters to the early majority. There is a "chasm" that some products fail to cross, which prevents them from achieving widespread adoption.

Examples include the Segway, which was expected to revolutionize personal transportation but ended up as a niche product. Another example is Google Glass, which did not gain mainstream adoption and is now used in specialized environments like aviation.

Products that fail to cross the chasm either become niche products or are discontinued. Conversely, products that reach maturity will eventually face decline, leading to their discontinuation as well.

Product Life Cycle Phases

Based on the S-curve and the concept of the chasm, a product's life cycle can be divided into four key phases:

Innovation: The product is developed and introduced to the market.
Growth: The product gains market share and grows rapidly.
Maturity: The product reaches peak market penetration, and growth slows.
Decline: The product is discontinued or becomes obsolete.

Managing the Product Life Cycle

To manage the product life cycle effectively, the BCG Matrix, developed by Bruce Henderson of the Boston Consulting Group in the 1970s, can be used. The matrix categorizes products based on market share and market growth into four quadrants:

Question Marks (Apost): High growth, low market share. This is where new products start as investments or bets.
Stars: High growth, high market share. Products in the growth phase become stars.
Cash Cows: Low growth, high market share. Mature products generate stable revenue with minimal investment.
Dogs: Low growth, low market share. These are products that either failed to grow or are in decline and may be discontinued.

Investment Strategies Across Phases

Innovation/Question Marks: Significant investment is required in product development and marketing to find a product-market fit.
Growth/Stars: Continued investment in development and scaling operations is critical to support rapid growth.
Maturity/Cash Cows: Investment decreases as the focus shifts to maintaining operational efficiency and profitability.
Decline/Dogs: Minimal investment as the product is phased out.

Tools for Managing Each Phase

Different tools and frameworks are appropriate for managing products at various stages:

Innovation: Focus on finding product-market fit using OKRs (Objectives and Key Results) to guide development and measure progress.
Growth: Utilize roadmaps to plan development and OKRs to track progress and growth metrics.
Maturity: OKRs are sufficient to maintain the product's performance and manage ongoing operations.
Decline: Minimal tools are needed as the focus is on discontinuing the product.

Functionalities Within a Product

The BCG Matrix can also be applied to functionalities within a product. For example, at Conta Azul, different functionalities like “Receba Fácil Boleto” and the API were in the growth phase, while others like “Receba Fácil Cartão” were in the innovation phase. Using the BCG Matrix helps in managing these functionalities effectively within the broader product life cycle.