What are the stages of the industry life cycle?

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pohnpei397 eNotes educator| Certified Educator

The industry life cycle is a cycle that most products go through.  This cycle starts with the product’s entry into the market and ends with the decline of that product.  Products typically go through all of these stages eventually, but they do not do so at the same pace.  There are five stages that are generally said to be part of this cycle.

The first stage can be called the introductory stage.  During this stage, the product is just coming on the market.  Companies are figuring out how much of a market there will be for the product.  For example, in the personal computer industry, this stage would have been in the early-to-mid 1980s as companies explored the possibilities of selling these devices.

The next stage is the stage of early growth.  Here, the industry starts to shake out.  A dominant design for the product starts to emerge.  With the PC market, this might have occurred as graphic user interfaces came to dominate in the late ‘80s. 

After this comes a stage of late growth.  In this stage, companies have essentially figured out how they will design and market their product.  They now seek economies of scale and other ways to reduce the costs of production.  This typically results in a number of competitors being driven out of the market.

The next stage is maturity.  This is when the product has penetrated essentially all parts of the market.  Profitability declines as there are fewer possibilities for growth.  Further consolidation of the market may occur.

Finally, we see decline.  In this stage, the revenues and profits of the industry decline.  This may be caused by the rise of a new technology.  It appears that the market for desktop PCs, at the very least, is in this stage.  We see these computers being replaced by laptops and, more and more, by tablets and smart phones.

These are the five stages of the industry life cycle.  Please note that different commentators use different terms for these stages. 

malkaam | Student

There are four stages of an industry life cycle, namely, introduction, growth, maturity and decline.

The very first stage is introductory stage in which the product is introduced to the market, very little competition prevails, and marketing is done mainly to spread awareness. Mainly such products attract innovators and opinion leaders, and the product line is very limited.

The second stage is of Growth in which company sales and profits start increasing, the product and company gain goodwill, targets mass market and a little competition prevails in the market. The marketing of product is done to persuade the buyers to purchase. Product line and number of outlets start increasing.

The third stage is of Maturity, in which the sales and profits have reached the peak and are now on the way down, number of outlets is maximum, full line of product is available, and there is substantial amount of competition. In this stage the company tries to retain persuade and motivate its buyers to purchase.

The very last stage is of decline, whereby the sales and profits suffer a setback, and only bestselling products are supplied to market. In this stage it is the decision of the industry to retain its customers, cut back the goods least demanded and try to revive the product through innovation or to cut back its supply. The target market includes only laggards.