Analyzing Industry Maturity Stages: The Product Life Cycle (Industry Life Cycle) of Fox, Wasson, Hofer, Anderson &
Zeithaml, Hill & Jones
The Product Life Cycle
model can help analyzing
Product and Industry
Maturity Stages.
Any Business is
constantly seeking ways
to grow future cash flows
by maximizing revenue
from the sale of products
and services. Cash Flow
allows a company to
maintain viability, invest
in new product
development and
improve its workforce; all
in an effort to acquire
additional market share
and become a leader in its
respective industry.
A consistent and sustainable cash flow (revenue) stream from product sales is key to any long-term investment, and the
best way to attain a stable revenue stream is a Cash Cow product, leading products that command a large market share in
mature markets.
Also, product life cycles are becoming shorter and shorter and many products in mature industries are revitalized by
product differentiation and market segmentation. Organizations increasingly reassess product life cycle costs and
revenues as the time available to sell a product and recover the investment in it shrinks.
Even as product life cycles shrink, the operating life of many products is lengthening. For example, the operating life of
some durable goods, such as automobiles and appliances, has increased substantially. This leads the companies that
produce these products to take their market life and service life into account when planning. Increasingly, companies are
attempting to optimize life cycle revenue and profits through the consideration of product warranties, spare parts, and
the ability to upgrade existing products.
It's clear the concept of life cycle stages has a significant impact upon business strategy and performance. The Product Life
Cycle method identifies the distinct stages affecting sales of a product, from the product's inception until its retirement.
The stages in the life cycle
•
•
•
Introduction stage - the product is introduced to the market through a focused and intense marketing effort
designed to establish a clear identity and promote maximum awareness. Many trial or impulse purchases will
occur at this stage. Next, consumer interest will bring about the
Growth stage, distinguished by increasing sales and the emergence of competitors. The Growth stage is also
characterized by sustaining marketing activities on the vendor's side, with customers engaged in repeat
purchase behavior patterns. Arrival of the product's
Maturity stage is evident when competitors begin to leave the market, sales velocity is dramatically reduced,
and sales volume reaches a steady state. At this point in time, mostly loyal customers purchase the product.
Continuous decline in sales signals entry into the
•
Decline stage - the lingering effects of competition, unfavorable economic conditions, new fashion trends, etc,
often explain the decline in sales.
Several variations of the industry life cycle model have been developed to address the development of the product,
market, and/ or industry. Although the models are similar, they differ as to the number and names of the stages. Here are
some major ones:
variations of the life cycle model
1973: Fox: precommercialization - introduction - growth - maturity - decline.
1974: Wasson: market development - rapid growth - competitive turbulence - saturation/maturity - decline
1984: Anderson & Zeithaml: introduction - growth - maturity - decline
1998: Hill and Jones: embryonic - growth - shakeout - maturity - decline
Compare with Product Life Cycle: Bass Diffusion model | ADL Matrix | BCG Matrix | Relative Value of Growth |
Positioning | GE Matrix | Innovation Adoption Curve | STRATPORT | Profit Pools | Marketing Mix | Four
Trajectories of Industry Change | Co-Creation | Disruptive Innovation
Return to Management Hub: Change / Organization | Decision-making / Valuation | Finance / Investing | Marketing
| Strategy | Supply Chain / Quality
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