Industrial Life Cycle

What is industry lifecycle?

Like other living creatures, industry also has its circle of life. The industry lifecycle imitates the human lifecycle. The stages of industry lifecycle include fragmentation, shake-out, maturity and decline (Kotler 2003). These stages will be described in the followings section.

What are the main aspects of industry lifecycle?

Fragmentation Stage

Fragmentation is the first stage of the new industry. This is the stage when the new industry develops the business. At this stage, the new industry normally arises when an entrepreneur overcomes the twin problems of innovation and invention, and works out how to bring the new products or services into the market (Ayres et al., 2003). For example, air travel services of major airlines in Europe were sold to the target market at a high price. Therefore, the majority of airlines' customers in Europe were those people with high incomes who could afford premium prices for faster travel.

In 1985, Ryanair made a huge change in the European airline industry. Ryanair was the first airline to engage low-cost airlines in Europe. At that time, Ryanair's services were perceived as the innovation of the European airline industry (Le Bel, 2005). Ryanair tickets are half the price of British Airways. Some of its sales promotions were as low as £0.01. This made people think that air travel was not just made for the rich, but everybody (Haley & Tan 1999).

Ryanair overcame the twin problems of innovation and invention in the airline industry by inventing air travel services that could serve passengers with tight budgets and those who just wanted to reach their destination without breaking their bank savings. Ryanair achieved this goal by eliminating unnecessary services offered by traditional airlines (Kaynak & Kucukemiroglu, 1993). It does not offer free meals, uses paper-free air tickets, gets rid of mile collecting scheme, utilises secondary airports, and offers frequent flights. These techniques...