what is the industry life cycle 
the industry life cycle refers to the evolution 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 significant uncertainty regarding market size product specifications 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 cyclethere 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 1life cycles are present in all aspects of life the industry life cycle can relate to youth inexperience and determination introduction learning improvement and social 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 technology sales profits and cash flows are typical financial metrics followed closely in every phase of the industry life cycle industry life cycle phasesthe introduction or startup phase involves the development 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 providers 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 expenses are incurred to develop and market the offering while revenues are still low in this second phase consumers have come to understand the value of the new offering business or industry demand grows rapidly a handful of important players usually becomes apparent and they compete 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 business processes are improved and geographical expansion is common once the new product has demonstrated viability larger companies in adjacent industries tend to enter the market through acquisitions or internal development 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 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 important price competition becomes much more relevant as product differentiation declines with consolidation businesses may prolong the maturity phase by repositioning their offerings investing in new markets and technology and spurring new growth the decline phase marks the end of an industry s or business ability to support growth obsolescence and evolving end markets end users negatively impact demand leading to declining revenues this creates margin pressure forcing 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 business model pushing industry participants into adjacent markets 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 decline and ultimate market exit examplessome industries in the startup or emergent stage include the artificial intelligence industry the self driving vehicle industry the biotechnology industry and the virtual reality industry 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 but its ability to change its business efficiently and effectively to serve huge populations in asia also put it in the growth phase the computer industry as well has had an extended growth phase because of its longtime focus on updating hardware features and functionality in the u s mature industries include food and agriculture mining and financial services companies such as apple xerox intel ibm and procter gamble are considered mature phase companies certain revenue analysis research indicates that the fastest declining industries in the u s include 2