What Is Digital Product Development? Breaking Down Life Cycle Stages and Growth Strategies

Are you looking to create a digital product that provides real value to users while also keeping up with evolving customer expectations and maintaining a competitive edge? Effective digital product development is key to achieving these goals. 

Unfortunately, according to a report by Harvard Business School, 95% of new products introduced each year fail, leaving many organizations struggling to succeed in the digital marketplace. To avoid becoming part of this majority, it's important to have a proven strategy for taking digital products to market. 

That's where the following framework comes in. By implementing best practices, you can effectively develop digital products that meet the needs of your users and stay ahead of the competition.

What is digital product development?

The success of any digital product development largely depends on the collective efforts of various departments within an organization. From ideating and exploring solutions to conducting thorough market research, designing, testing, and launching the final product, every step plays a crucial role in ensuring a successful outcome. It doesn't matter whether the product is aimed at facilitating an organization's digital transformation or catering to consumer needs through an app, the fundamental process that leads to success in the market remains the same.

What is the difference between product design and product development? 

Product development and design are sometimes used interchangeably. However, they aren’t the same. 

Product development is the process from ideation to launch and ongoing product improvements. Product design is the part of the overall process that focuses on creating a functional yet user-friendly and appealing product.

While different teams may be involved in the product design and development process, it's not always necessary to divide all the work into specific tasks for each area. Finding a balance between product design vs. product development can often lead to a more efficient and effective process.  All teams should collaborate, provide input, and focus on producing the most marketable and profitable product.

A quick glance into the digital product development life cycle 

Digital product development is a complex process involving a series of stages, each with unique challenges and requirements. Let’s look into the digital product development cycle, exploring each stage in turn and discussing the key considerations and best practices to ensure success at every step of the way. 


The first stage is the introduction stage, during which the product is launched and made available to the market. This is a critical stage because it sets the tone for the rest of the product's life cycle. If the product is well-received during this stage, it has a good chance of success in the future.


After a digital product is launched, it is expected to attract early adopters who are always eager to try out the latest innovations. If the product is well-received and meets the needs of its target audience, the sales are likely to increase as more people become aware of it and start using it. 

As the product gains popularity, its use is likely to spread to a wider audience, leading to more widespread adoption. This can lead to even greater success and growth for the product and the company behind it.


At this stage, the product has reached its maximum potential in terms of sales growth. This is the point where market leaders will begin to develop effective strategies to maximize revenues. This can be achieved by increasing prices, expanding market share, or developing new products or services. 

It’s important for companies to continue innovating and adapting to changing market conditions during this stage to stay ahead of the competition. Successful companies will also focus on customer retention and building brand loyalty to maintain their market position.


In the final phase of the digital product life cycle, often referred to as the decline stage, the sales and usage of the product gradually decrease as it becomes less relevant to consumers. This is a natural part of the product life cycle as newer and more advanced products emerge to take its place. 

Companies must carefully manage this phase to ensure that they can maximize profits and minimize losses. This may involve gradually phasing out the product while investing resources into developing next-generation products that can meet the changing needs of consumers. It's a delicate balancing act that requires careful attention to market trends and consumer behavior.

Understanding the stages of digital product development

From initial ideation to final launch, every stage requires careful planning and execution to ensure the end product meets users' needs and achieves business goals. Here are the different stages of digital product development, their key characteristics, and best practices for managing each stage effectively. 

Stage 1: Idea generation

Digital product development starts with an idea, but not just any idea will do. To make a product that will be successful, the idea needs to be viable. The ideation stage is a combination of brainstorming and creativity, which is then combined with data-based insights. 

During this stage, the product development team will generate ideas for solving a market's problem and use a variety of market research methods—such as surveys, questionnaires, one-to-one interviews, focus groups, investigating user behavior, and competitor analysis—to ensure that there is a market for the product.

Formulating a viable idea is crucial; 21% of products developed don’t meet customer needs, leading to failed projects, wasted time, and no return on investment.

Stage 2: Conceptualization and planning

The next development phase involves taking digital product ideas and finalizing the product concept. This stage includes prioritizing suggestions for the product’s features and functionality based on user feedback and your company’s business goals.

Market research with each iteration of the product concept will enable the team to optimize the final product concept. It helps the team to gather valuable insights into the needs, preferences, and behaviors of the target audience. 

By conducting market research at each iteration of the product concept, the team can identify potential issues, refine the product features, and optimize the overall product concept. This approach can help ensure that the final product concept is well-aligned with the customers' needs and expectations, increasing the chances of success in the market.

Stage 3: Design and prototyping

This phase of the digital product development process includes defining the details to make the product concept design functional and appealing to users. At this stage, the product development team will create wireframes to visualize the product’s functionality and workflows before design. These visualizations will align the team and make it possible to collect specific user feedback.

The design team will also create prototypes that show how the product will work and the experiences it will provide.  They often utilize rapid prototyping, which uses actual code to provide a realistic user experience. 

Designers can build these prototypes with the same branding, colors, animations, and features they plan for the final product, so market research yields deeper insights. In addition, the prototype serves as a guide for developers, showing them exactly what the design team has determined as the best UX/UI.

Stage 4: Development and testing

After design and prototyping, software developers write and test code to create the product. Agile development processes enable the team to develop and test each feature and iteration to ensure the product works correctly and is free of bugs and errors. Development teams may also develop a minimum viable product (MVP), a basic version of the overall product concept.

Rigorous testing is essential for ensuring product quality. It helps to identify any issues or defects that may be present in the product and allows them to be addressed before the product is released to the market. This is important because it can prevent costly and embarrassing mistakes that could damage a company's reputation or result in legal action.

Stage 5: Launch and deployment

The digital product development stages conclude with the product launch and deployment. The product development and marketing teams work together on launch strategies, which may begin before the product is widely available with social media buzz, teaser campaigns, influencer marketing, and pre-release reviews and blogs. The launch will help connect the target audience with the product through a website or microsite, advertising, email marketing, and other marketing initiatives.

While marketing resources create excitement about the product, the development team continues to work to ensure smooth deployment.

When deploying digital products, it’s important to consider platform compatibility and scalability factors. Platform compatibility refers to the ability of the solution to run on different operating systems and hardware configurations. It’s important to ensure the solution is compatible with the platforms it will be deployed on to avoid compatibility issues and ensure smooth operation. 

Scalability, on the other hand, refers to the ability of the solution to handle increased workload or traffic without experiencing performance degradation. It’s crucial to consider scalability during deployment to ensure that the solution can handle increased demand as the business grows or as more users access it. By considering these considerations during deployment, businesses can ensure their digital products are reliable, efficient, and able to meet their current and future needs.

Strategies for growth in agile digital product development

With innovative technologies and rapidly changing consumer preferences, businesses need to adapt and evolve their digital strategies to stay ahead of the curve. Let’s explore some effective strategies for driving growth in digital product development and how to implement them effectively.

Market entry and positioning

Market research and user testing will help you understand the ideal user persona for your product and narrowly define your target market. This information will help your marketing efforts and maximize ROI.

Interacting with potential users during market research validates market demand and allows you to collect information on the most effective channels to reach your audience and key elements of messaging that will be most effective at influencing purchasing decisions.

Continuous improvement and iteration 

During product development, your team will have to set and address priorities and then test the product with user groups. Collecting feedback and using it to inform development will increase the value that customers receive at launch. 

However, feedback can also help you create a roadmap for new features to add in the future. Collect feedback with each agile development iteration of your digital products for continuous improvement and a product that provides more value over time.

Scaling and expansion

Teams that remain forward-thinking when executing the product development strategy will identify potential issues your business may encounter when scaling the product, including resources, infrastructure or cloud services, and production costs. Product development processes can also include researching the feasibility of expanding internationally at some point, including a broader competitive analysis to understand the global technology landscape.

Monetization models 

As you develop your product, it's important to consider the best delivery model for your target audience. The subscription model has become popular for many companies offering digital products. By using this model, users can consume software as a budget-friendly and low-risk operational expense rather than a large upfront capital expense. 

This makes it easier to get approval from finance and provides users with the latest, most secure version of the software as new releases are pushed out. Additionally, your company benefits from the subscription model with monthly recurring revenue. 

However, depending on your product, other strategies may also be effective. You could sell licenses to use your software, offer a freemium model to convert users to paying customers, monetize your solution by collecting residuals from transactions, partner with in-app advertising, or enable in-app purchases. By analyzing data collected during product development, you can gain insights into your user base and make an informed decision about the best delivery model for your business.

Success throughout the product life cycle

If you aim to launch a successful digital product, it’s essential it resonates with your target market, meets users' needs, encourages adoption, and maximizes revenues and profits throughout its life cycle. To achieve these goals, you must optimize your digital product development processes. It starts from ideation and conceptualization to planning, design, prototyping, development, testing, and launch.

Iterative development is the best strategy for developing digital products. By testing and conducting market research at each phase, you can ensure you are investing in a product with the potential to capture market share, and you can address issues early on to keep the project on track.

It's important to recognize that product development is a continuous process. Even after launch, your team must listen to feedback, respond to market changes, and adapt and improve the product accordingly. 

Continuous improvement offers many benefits for your business. Approximately one-third of improvements will have a financial impact, a quarter will save time, and 1 in 10 will save you money.

How Patent355 can help

Patent355 offers support and expertise at each phase of digital product development, including customer discovery research, advice on integrating behavioral design, product design services, high-fidelity prototyping, product validation, and consulting.

Contact us to learn more about effective ways of bringing your ideas to market.

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