Definition
A sunset industry is an industry that has entered the mature phase of its product life cycle and is experiencing a decline in demand, profitability, and relevance. This decline may be due to technological advancements, shifts in consumer preferences, market saturation, or emerging competition from newer, more innovative industries. Examples historically include the buggy whip industry during the advent of the automobile or more recently, industries like typewriter manufacturing and traditional film photography.
Examples
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Buggy Whip Industry: During the early 20th century, the rise in automobile use reduced the demand for horse-drawn carriages and, by extension, buggy whips. As cars became the primary mode of transport, the buggy whip industry became obsolete.
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Typewriter Manufacturing: With the innovation and widespread adoption of computers and word processing software, the need for typewriters has drastically decreased, leading to its classification as a sunset industry.
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Traditional Film Photography: The rise of digital photography has significantly reduced the demand for traditional film and film processing services, pushing this once-thriving industry into sunset status.
Frequently Asked Questions
Q1: Why is the term ‘sunset industry’ used?
The term “sunset industry” is used metaphorically to describe industries that are in decline, similar to how the sun sets at the end of the day.
Q2: Can a sunset industry experience a revival?
Yes, some sunset industries can experience a revival if they innovate and adapt to new technologies or market trends. For example, the vinyl record industry has seen a resurgence due to niche market interest.
Q3: How does a sunset industry affect the economy?
Sunset industries can lead to job losses and reduced economic activity in that sector. However, resources and labor may be redirected to growing industries, potentially balancing overall economic impact.
Q4: What are the indicators of a sunset industry?
Indicators include declining sales and profits, shrinking market share, technological obsolescence, and reduced investment in the sector.
Q5: How do companies in sunset industries remain competitive?
Companies may innovate, diversify their product offerings, or pivot to new markets. Some extend the product life cycle through niche marketing or by leveraging brand legacy.
Related Terms
- Product Life Cycle (PLC): Stages a product goes through from development to decline: introduction, growth, maturity, and decline.
- Market Saturation: A situation where the majority of potential customers have purchased the product, limiting opportunities for new growth.
- Obsolescence: The process of becoming outdated or no longer used, often due to technological advancements.
- Industry Lifecycle: The stages an industry goes through: introduction, growth, maturity, and decline.
Online References
Suggested Books for Further Studies
- Industry Dynamics: Foundations of Economic Analysis, by Fuss, Melvyn
- Creative Destruction: How Innovation Makes Markets and Policies Obsolete, by Richard Foster and Sarah Kaplan
- Strategy Maps: Converting Intangible Assets into Tangible Outcomes, by Robert S. Kaplan and David P. Norton
Fundamentals of Sunset Industry: Economics and Management Basics Quiz
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