Topic 8 Industry Life Cycle

The model of industry lifecycle follows a bell curve highlighting the growth and decline of an industry over time. In the early stages we see slow growth as the product or service isn’t known and people are still learning about it. As time goes on the growth accelerates until eventually product sales reach saturation point, where everyone who wants the product/ service already has it, finally after a period of time the product or service becomes less relevant and sales fall into a decline as the product/ service is superseded by alternative products or is no longer relevant.

Figure 12 Explanation

  • Introduction phase is good but dangerous, you can spend all the investment and someone follows and undercuts you.
  • Growth phase – great phase as most people are growing so less focused on competition.
  • Maturity – Growth will only come from taking market share so suggests the need for differentiation.
  • Decline – dangerous and tends to be price dominated.

Optional Explainer Video – Industry Lifecycle

If you wish to learn more about the industry life cycle model in more detail this 6 min video presents this model in much more detail courtesy of the text book “Strategic Management” by Saloner, Shepheard and Podolny.

  • Activity
  • Draw an industry life cycle graph
  • Using your industry knowledge and research determine where the market currently is on the graph
  • Based on the point on the graph what should your business strategy include ?