art in Development

uct life cycle figure here. During the introduction stage, the product’s novelty dictates that sales are small and grow relatively slowly. If a market for the new product develops, this initial stage gives way to the growth stage, during which sales grow rapidly. Over time, market saturation causes the product to enter the maturity stage, during which sales growth flattens. Eventually, the product enters the decline stage, as technologically superior substitutes emerge. The nature of competition changes as the market advances from one stage to the next.

IllustratIon by darrel rees

Internet usage over the last two de-
cades fits comfortably into this pattern.
During the introduction stage of the
broadband Internet during the mid-to-
late 1990s firms focused on inducing
early adopters to try the product, as the
theory predicts. Early adopters tend to
be technologically sophisticated, risk
tolerant, and price insensitive, which
describes the typical Internet user circa
15 years ago. This focus in turn caused
firms to emphasize cutting-edge tech-
nological features and to deemphasize
product quality and price, once again,
as theory predicts.

 

Supply-Side considerations: Dominant Design Theory A parallel line of research in this framework explores the supply-side of market maturation. Called dominant