Strategies for Mature and Declining Markets

Question 1

How Does the Target Market Change

Answer 1

Question 2

Shakeout Stage

Answer 2

Shakeout: the stage at which the weakest players in the industry are eliminated. A lot of businesses fail because they can’t maintain the proper demand to meet their costs.

Rationalize refers to making a rational decision as to what products you think you should keep vs. which ones you should drop

Question 3

Which Companies Survive the Shakeout?

Answer 3

• Companies that have no clear competitive advantage get knocked-out.
• Companies that focus on maintaining market share rather than short-run profit. If there’s no short-term profitability, you’ll get knocked out.

As competition is high and prices have started to drop, in the shake-out period companies need a large market share and high turnover to generate sufficient revenues.

Therefore, companies need to focus on maintaining a high market share.

Success requires:

• Development of a well-maintained business strategy to maintain a clear competitive advantage
• Marketing programs that are geared towards growth & profit for short-term profitability

Question 4

Expected Characteristics and Responses in Mature Life Cycle

Answer 4

Question 5

Expected Characteristics and Responses in Decline Life Cycle

Answer 5

•Relative attractiveness:

• Conditions of demand
• Exit barriers
• The intensity of future competitive rivalry

Important considerations:

1. Are there “exit” barriers? i.e. Contracts? Business loans?
2. What will you try to salvage and, what will you let go down with the ship?
3. Should we do Divestment or Liquidation?

Question 6

Strategies in the Maturity and Decline Stages

Answer 6

Question 7

Loyalty Programs

Answer 7

Encourage customers to come back in the future. Not all customer segments are motivated by the same things though, so make sure to offer what appeals to them (e.g. not everyone likes coffee, not everyone likes to travel, etc.)

Question 8

Finding New Uses for Product

Answer 8

Helps you find an extended use to fight against the decline in consumer demand for the original use of your product (e.g. Duck Tape → Duct Tape, Baking Soda’s multiple uses)

Question 9

Methods of Maintaining a Low-Cost Position

Answer 9

• A no-frills product (stripped down product)
• Innovative product design
• Source cheaper raw materials
• Low-cost distribution/self-serve•Innovative production process
• Reductions in overhead

Question 10

Check If Customer Expectations Have Changed

Answer 10

Make sure to set expectations for your customers and MEET those expectations.

Service Quality = Expectations – Perceptions of Service Received

(SQ = E – P)