What is the difference between product lifecycle & product lifecycle management? It’s confusing for sure, but both are essential in increasing profits.
Wow, talk about confusing! Whoever coined the terms product lifecycle management and product lifecycle management must have intended to confuse everyone and anyone in the business. As frustrating as it may appear, there is an inherent difference between these product management principles, and it’s incumbent upon companies to understand their meanings.
Both Product Life Cycle & Product Lifecycle Approaches Can Increase Profit
Perhaps it’s best to start by describing the differences between these two product management principles and determine how each plays a vital role in maximizing gross profit margins. Afterward, it will become abundantly clear how both used in unison can maximize revenue and increase gross profit.
What is the Product Life Cycle Management?
Product lifecycle management refers to a product’s phases of growth and decline within the given market or industry to which it’s sold. It refers to a product’s life from its introduction, growth, peak, and eventual decline. These are the four phases of product lifecycle management. In each of these phases, companies adopt different pricing and marketing strategies.
- Market Introduction Phase: The initial design and introduction of a product to a new market or industry. Pricing is often higher because development costs haven’t been recouped.
- Market Growth Phase: Prices are maximized, and costs decline as manufacturing efficiencies improve, and consumers and businesses accept the new product. Companies achieve substantial gross profit margins during this period.
- Market Peak or Mature Phase: Prices gradually decline as more and more competitors offer competition through new product introductions. It’s essentially the peak of the product’s useful life and involves the market becoming with the game.
- Market Decline Phase: This is the gradual decline of the product’s use or application in a given market. Pricing lowers, as does gross profit margins as demand decreases.
What is Product Lifecycle Management? Now that the “lifecycle” is understood, it’s time to investigate product lifecycle management. In its simplest form, lifecycle management is the practice of managing a product’s life as it goes from the design phase to commercialization. It involves working the product from various points within the company itself and includes multiple measures to ensure its quality and reliability.
- Statistical Process Control: Companies will use SPC (Statistical Process Control) in manufacturing to ensure that products from one batch to the next meet internal specifications and performance requirements.
- QCR’s ECN’s & Strict Quality Control: QCR’s (Quality Control Review), ECN’s (Engineering Change Notices) are used to ensure quality is upheld, and design changes are immediately implemented.
Product Lifecycle Management Can be a Closed-Loop ProcessDepending upon the company and the market. The product lifecycle management approach can be a closed-loop process where the company manages the product internally and externally, from its customers and back again. It involves delivering the product, guiding usage, and recouping waste, and using it as an inexpensive source of raw material in new production. It’s essentially a use & re-use or optimal recycling program.
Companies that manage their product’s life in a given market are used to adopting different marketing and pricing strategies during the various four phases above. To increase revenue, reduce costs, and improve gross profit margins, they will combine their management of the product to include the closed-loop lifecycle management approach.