Question

Discuss how each stage of the industry life cycle (introduction, growth, maturity, and decline) can play a role in decisions that managers must make at the business level. Provide an example for each stage.

Answer 1

THE INDUSTRY LIFE CYCLE -   

HOW EACH STAGE OF LIFE CYCLE CAN PLAY A ROLE IN DECISIONS THAT MANAGERS MUST MAKE AT BUSINESS LEVEL ( WITH EXAMPLES)

1. INTRODUCTION

Once a product has been developed, the first stage is its introduction stage. In this stage, the product is being released into the market. When a new product is released, it is often a high-stakes time in the product's life cycle - although it does not necessarily make or break the product's eventual success.

During the introduction stage, marketing and promotion are at a high - and the company often invests the most in promoting the product and getting it into the hands of consumers. This is perhaps best showcased in

EXAMPLE- Apple's (AAPL) - Get Report famous launch presentations, which highlight the new features of their newly (or soon to be released) products.

It is in this stage that the company is first able to get a sense of how consumers respond to the product, if they like it and how successful it may be. However, it is also often a heavy-spending period for the company with no guarantee that the product will pay for itself through sales.

Costs are generally very high and there is typically little competition. The principle goals of the introduction stage are to build demand for the product and get it into the hands of consumers, hoping to later cash in on its growing popularity.

2. GROWTH

By the growth stage, consumers are already taking to the product and increasingly buying it. The product concept is proven and is becoming more popular - and sales are increasing.

EXAMPLE - APPLE i Phone , Other companies become aware of the product and its space in the market, which is beginning to draw attention and increasingly pull in revenue. If competition for the product is especially high, the company may still heavily invest in advertising and promotion of the product to beat out competitors. As a result of the product growing, the market itself tends to expand. The product in the growth stage is typically tweaked to improve functions and features.

As the market expands, more competition often drives prices down to make the specific products competitive. However, sales are usually increasing in volume and generating revenue. Marketing in this stage is aimed at increasing the product's market share.

3. MATURITY

When a product reaches maturity, its sales tend to slow or even stop - signaling a largely saturated market. At this point, sales can even start to drop. Pricing at this stage can tend to get competitive, signaling margin shrinking as prices begin falling due to the weight of outside pressures like competition or lower demand. Marketing at this point is targeted at fending off competition, and companies will often develop new or altered products to reach different market segments.

Given the highly saturated market, it is typically in the maturity stage of a product that less successful competitors are pushed out of competition - often called the "shake-out point."

In this stage, saturation is reached and sales volume is maxed out. Companies often begin innovating to maintain or increase their market share, changing or developing their product to meet with new demographics or developing technologies.

The maturity stage may last a long time or a short time depending on the product. For some brands, the maturity stage is very drawn out, EXAMPLE - Coca-Cola .

4. DECLINE

Although companies will generally attempt to keep the product alive in the maturity stage as long as possible, decline for every product is inevitable.

In the decline stage, product sales drop significantly and consumer behavior changes as there is less demand for the product. The company's product loses more and more market share, and competition tends to cause sales to deteriorate.

Marketing in the decline stage is often minimal or targeted at already loyal customers, and prices are reduced.

Eventually, the product will be retired out of the market unless it is able to redesign itself to remain relevant or in-demand. For EXAMPLE- products like typewriters, telegrams and muskets are deep in their decline stages (and in fact are almost or completely retired from the market).

SOME OTHER EXAMPLES -

Typewriter

A classic example of the scope of the product life cycle is the typewriter.

When first introduced in the late 19th century, typewriters grew in popularity as a technology that improved the ease and efficiency of writing. However, new electronic technology like computers, laptops and even smartphones have quickly replaced typewriters - causing their revenues and demand to drop off.

Overtaken by the likes of companies like Microsoft , typewriters could be considered at the very tail end of their decline phase - with minimal (if existent) sales and drastically decreased demand. Now, the modern world almost exclusively uses desktop computers, laptops or smartphones to type - which in turn are experiencing a growth or maturity phase of the product life cycle.