Industry Life Cycle

It is important to study the different growth stages of an industry and factors that affect it, so that problems that are likely to arise from each stage could be easily monitored and resolved. These are considered during the policy and strategy making of a business.

An Industry just like living-things undergoes different growth stages from its birth through death. Several measures could be taken though, to prevent an industry from deteriorating, unlike living-things. The Industry life cycle comprises Introduction, Growth, Maturity, and Decline.

Introduction: This means the emergence of a business; where its products and services are introduced to the market and promoted through several marketing activities. Here, there is a low market penetration, and the sales figures are low.

Growth: This stage comes after the introduction of an industry, where there is an evident increment in production and expansion of sales, due to increased knowledge and improved market awareness.

Maturity: Saturation is attained at this stage. There is a great volume of production and sales, such that production becomes solely for the purpose of replacement. The business strives to see that its supply continues to satisfy increasing market demand.

Decline:  This is the most critical stage of the cycle. There is a sudden outburst of substitute products or services, which might be threatening to an existing industry. Demand becomes relatively low, and the business begins to deteriorate. Unless certain objectives are put in place to help revive it, the business collapses.

Below is a diagram that illustrates the different stages of the cycle.