What Is the Industry Life Cycle?

The industry life cycle refers to the ev𝓀olution of an industry or business through four stages based on the business characteristics commonly displayed in each phase.

The four phases of an industry life cycle are the introduction, growth, maturity, and decline stages. Industries are born when new products are developed, with s♐ignificant uncertainty regarding market size, product specificaꦇtions, and main competitors.

Consolidation and failure whittle down an established industry as it grows, and ✤the remaining competitors minimize expenses as growth slows and demand eventually wanes.

Understanding the Industry Life Cycle

There is no universal definition for the various stages of the industry life cycle, but commonly, it can be organized into introduction, growth, maturity, and decline.

Life cycles are present in all aspects of life. The industry life cycle can relate to youth, inexperience, and determination (introduction), learning, improvement, and so🌠cial expansion (growth), achievement and fulfillment (maturity), and the decreasing ability to compete, win, and thrive (decline).

The relative length of each phase of the industry life cycle can vary substantially among industries. The standard model typically deals with manufactured goods, but today's service economy can function somewhat differently, especially in the realm of internet communications 澳洲幸运5官方开奖结果体彩网:technology.

Industry Life Cycle Phases

Introduction Phase

The introduction, or startup, phase involves the d💙evelopment and early marketing of a new product or service. Innovators often create new businesses to enable the production and proliferation of the new offering.

Information about the products and industry participants is often limited, so demand tends to be unclear. During this stage, consumers of the goods and services need to learn more about them, while the new providersꦜ are still developing and honing the offering.

The industry or business tends to be highly fragmented in the introduction stage. Participants tend to♎ be unprofitable because expens✤es are incurred to develop and market the offering while revenues are still low.

Growth Phase

In this second phase, consumers have come to understand the value of the new offering, business, or industry. Demand grows rap𒀰idly.

A handful of important players u꧂sually becomes apparent, and they co✅mpete to establish a share of the new market. Immediate profits usually are not a top priority as companies spend on research and development or marketing.

澳洲幸运5官方开奖结果体彩网:Business processes are improved, and geographical expansion is commo𒆙n. Once the new🍃 product has demonstrated viability, larger companies in adjacent industries tend to enter the market through acquisitions or internal development.

Maturity Phase

The maturity phase begins with a shakeout period, during which sales growth slows, focus shifts toward expense reduction, and consolidation ♛occurs (as companies begin to merge or acquire each other).

Some firms attain economies of scale, hampering the sustainability of smaller competitors. 澳洲幸运5官方开奖结果体彩网:Growth can continue.

As maturity is achieved, barriers to entry become higher, and the competitive landscape becomes more clear. Market share, cash flow, and ⭕profitability become the primary goals of the remaining companies now that growth is relatively less importa🅷nt.

Price competition becomes much 🏅more releva𝓡nt as product differentiation declines with consolidation.

Businesses may prolong the maturity phase by repositioning their offerings, inve🐟sting inജ new markets and technology, and spurring new growth.

Decline Phase

The decline phase marks the end of an industry's or business' 澳洲幸运5官方开奖结果体彩网:ability to support growth. Obsolescence and evolving end markets (end users) negatively impact demand, leading to declining revenues. This creates margin pressure, forcin✃g weaker competitors out of the industry.

Further consolidation is common as participants seek synergies and further gains from scale. The decline phase often signals the end of viability for the incumbent 澳洲幸运5官方开奖结果体彩网:business model, pushing industry participants into ad🍃jacent market♒s.

As with the maturity phase, the decline phase can be delayed with large-scale product improvements or repurposing. However, these tend simply to prolong the dec𒉰line and ultimate market exit.

Examples

Introduction Phase

Some industries in the startup or 澳洲幸运5官方开奖结果体彩网:emergent stage include the artificial intelligence industry, the self-driving vehi▨cle industry, the biotechnology industry, anꦆd the virtual reality industry.

Growth Phase

Coca-Cola is an example of a savvy life cycle survivor. In western countries, it is considered to ꧃be in the maturity stage because its market offers no room for expansion. But𒁏 its ability to change its business efficiently and effectively to serve huge populations in Asia also put it in the growth phase.

The 澳洲幸运5官方开奖结果体彩网:computer industry, as well, has had an extended growth phase because of its longtime focus on updati🐭ng hardware, fe🤡atures, and functionality.

Maturity Phase

In the U.S., 澳洲幸运5官方开奖结果体彩网:mature industries include food and agriculture, mining, and financial services. 𒆙Companies such as Apple, Xerox, Intel, IBM, and Procter & Gamble are considered mature-phase companies.

Decline Phase

Certain revenue analysis research indicates that the fastest declining industries in the U.S. include:

• Iron and steel manufacturing
• Natural gas distribution
• Semiconductor machinery manufacturing
• Oil drilling and gas extraction
• Chicken egg production

The Bottom Line

The industry life cycle refers to the stages of existence that꧂ an industry or business experiences, from its beginning to its end. The four phases are introduction, growth, maturity, and ♑decline.

Understanding the life cycle can help companies manage their operational and financial decisions and activities so that they position themselves to achieve important goals. These goals can include product research and devꦡelopment, better profitability, the implementation of innovative technology, expanding a customer base, and more.