There are four stages of the industry life cycle model,
- Introduction
- Growth
- Maturity
- Decline
Most industries have a life cycle. They go through the following four stages in their development.
Introduction Phase
The introduction phase is characterized by the initial offering of the products or services sold in this industry. People are unaware of the existence of these products, and firms try to grow consumer awareness as much as possible.
In the infancy of most industries, we can always find a technological breakthrough. A solo entrepreneur, a startup or an established company comes up with the technological innovation that gives birth to an industry.
More people will learn about the industry eventually, due to the word of mouth effect or to the marketing efforts of the few companies operating in the industry.
Consumers will learn of the industry and sales will speed up. When this happens, we would be in the growth phase.
Growth Phase
In the growth phase, revenues grow faster. But as more competitors into the market, companies must invest a lot of resources to grow the business and reach even more consumers.
This is the phase where companies grow geographically as well. They may expand to new geographic locations and even operate at a multinational level. Companies aim to expand their market share and win as many first time buyers as they can.
Sales reach their peak in the maturity phase and then slow down until the industry reaches its decline.
Maturity Phase
The maturity stage is characterized by a high level of competition and companies trying to do their best to keep their market share intact.
This is when firms differentiate their products even more and concentrate on specific market niches.
Decline Phase
Things are tough in the decline period. Competing industries have surpassed the pace of innovation of the industry in decline. This is where companies opt for the stock exchange listing.
But, some industries will never face a decline. Like, the food and clothing industry. We cannot even imagine the demand for clothing and food products drying up.
