The paper 'Problem Solving' is a good example of a Management Assignment. Industry analysis is a vitally important aspect of any firm with prospects of entering a given industry. The widely used marketing industry analysis is the product life cycle analysis, whereby there are four faces of the product life cycle including introduction, growth, maturity, and decline phases. The industry life cycle has five phases including introduction/pioneering phase, growth phase, mature growth/Shakeout phase, stabilization/maturity phase, and declining phase as shown in the figure below. Industry Life Cycle Phases The characteristics of these phases will be discussed independently: Introduction/Pioneering phase New and emerging and/or reformed industries are established basically from technological innovations, new customer needs, the changing relationships with regard to relative costs, as well as from other changes in social and economic aspects of the society.
At this stage, there are no rules governing and/or regulating the industry and thus the competitiveness of the industry is based on harmonizing the rules that should be established to necessitate growth for companies. The structural characteristics at this phase include: Technological and strategic uncertainty New established firms entering the industry High initial entry costs Early adopters are the main customers There are business subsidies It is extremely a short phase The main strategy adopted by firms at this stage is pioneering strategies that are aimed at helping firms to acquire a larger market share.
First-mover advantages at this phase are achieved through designing products and using innovative business processes in entering new markets. The firms that enter the industry use the late entry strategy. Growth phase At this stage, innovations in technology allow the emergence of new firms; new technological evolution significantly reduces the cost of products while at the same time improving product quality.
Accordingly, the demand for products increases while the industry grows with their entry together with market growth. Similarly, products are differentiated with regard to technology as well as product performance and reliability becomes a critical factor particularly for products that are complex during the introduction stage. The industry’ s life cycle technology becomes widely known and thus mass production can be realized. The marketing strategy at this stage is market leader strategy; for instance, the firm that is recognized as a market leader is characterized with the largest market share which forces other firms to introduce new products, intensify promotion and/or change their prices Mature growth phase This phase is characterized by above-average growth but the rate is no longer accelerating like in the growth phase.
The firms within the industry start experiencing stiff competition which results in erosion of profit margins. The main strategy that companies use at this phase is the challenger strategy; for instance, second-placed firms relative to a market share increase their rivalry to become market leaders. Maturity phase At this phase, there is a transition from modest growth experienced in the growth maturity phase to extremely slow or no growth.
This phase is regarded as the most critical period for companies within the industry due to the fact there are fundamental changes within the company and new trends are created including: