One of the best known and most enduring marketing concepts is the product life cycle.1 Products are born, their sales grow, they reach maturity, they go into decline, and they ultimately die. If products have life cycles, so too do the industries that produce them. The industry life cycle is the supply-side equivalent of the product life cycle. To the extent that an industry produces multiple generations of a product, the industry life cycle is likely to be of longer duration than that of a single product. The life cycle comprises four phases: introduction (or emergence), growth, maturity, and decline
Before we examine the features of each of these stages, let us examine the forces that are driving industry evolution. Two factors are fundamental: demand growth and the production and diffusion of knowledge.
DEMAND GROWTH
The life cycle and the stages within it are defined primarily by changes in an industry's growth rate over time. The characteristic profile is an S-shaped growth curve.
In the introduction stage, sales are small and the rate of market penetration is low because the industry's products are little known and customers are few.
The growth stage is characterized by accelerating market penetration as technical improvements and increased efficiency open up the mass market. Increasing market saturation causes the onset of the maturity stage. Once saturation is reached, demand is wholly for replacement. Finally, as the industry becomes challenged by new industries that produce technologically superior substitute products, the industry enters its decline stage.
CREATION AND DIFFUSION OF KNOWLEDGE
