C

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A
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T
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10

TEN
Strategies
for
Mature
and
Declining
Markets
McGrawHill/Irwin
2009 The McGraw-Hill
1-1
Companies,

Discussion Question
1. What are some the characteristics

of the transition period [shakeout or

competitive turbulence]?

Excess Capacity
> Expansion plans eventually overshoot market
demand

More Intense Competition

> Battle for increased volume and market share

Difficulty Maintaining Product Differentiation

> Weakening brand preference

Distribution Problems
> Channel members may reduce the number of
brands they carry as sales diminish

Pressures on Prices and Profits

> Prices decrease and profit margins are squeezed.

Discussion Question
2. What are some common strategic

traps during market shakeouts?

What are some common strategic traps

during market shakeouts?
> Failure to anticipate transition from growth to
maturity
> No clear competitive advantage
> Assumption that an early advantage will
insulate the firm from price or service
competition
> Sacrificing market share in favor of short-run
profit

Discussion Question
3. What are the keys to surviving
shakeouts as markets mature?

Two keys to surviving shakeouts

Sustain your competitive advantage
(low cost or differentiation), customer
satisfaction and loyalty
Pursue growth opportunities that arise
as market and competitive conditions
change

Discussion Question
4. In mature markets with many
competitors, what business
strategies are most successful?

Both analyzer and defender strategies

may be appropriate for units with
leading, or at least a profitable share of
one or more major segments in a
mature industry.
Analyzer Strategy
> Most appropriate for developed
industries that are still experiencing
some technological change and may
have opportunities for continued
growth.

Defender Strategy
> Works best in industries where the basic
technology is not very complex or is
unlikely to change dramatically in the short
run.
Both analyzer and defenders can attempt to
sustain competitive advantage in established
product markets.
> Through differentiation of their product
offering (using superior quality or service)
> Through maintaining a low-cost position.

Discussion Question
5. In mature markets with many
competitors, how can one maintain
a differentiated position?

Methods of
Differentiation

Product quality

Functional performance
Durability
Conformation to specifications
Features
Reliability
Serviceability
Fit and finish
Quality reputation of the brand name

Methods of
Differentiation

Service Quality

Reliability
Responsiveness
Empathy
Assurance

Measure Customer
Satisfaction
Measure
> Expectations/preferences (importance)
> Perceptions on how well the firm is
meeting expectations and preferences.
(satisfaction)

Satisfaction and
Importance
Satisfaction

No

Yes

Important
Yes

Needs attention

No

Dont Worry

Keep on

Cut Back?

ANALYSIS
Importance / Satisfaction Matrix
Automobile
Not Satisfied

Disgusters
Important

Engine Power
Transmission
Seat comfort

Annoyances
Not
Important

Roominess
(rear seat)

Satisfied

Delights
Fun to drive
Overall handling
Vehicle safety

Niceties
Fabric color

How satisfied are you with:

How important is:
Engine power
Smooth transmission
Rear seat roominess
Fabric color
Overall handling
Fun to drive
Vehicle safety
Seat comfort

Measure Customer
Satisfaction
Value of Loyal Customers
> Concentrate purchases (higher volume)
lower selling/distribution costs
> Provide positive word of mouth/referrals
> May pay premium prices for the value
received

Discussion Question
6. In mature markets with many
competitors, how can one maintain
a low-cost position?

Maintaining a Low-Cost
Position

A no-frills product
Innovative product design
Cheaper raw materials
Innovative production processes
Low-cost distribution
Reductions in overhead

Discussion Question
7. If you are in a mature market, what
are your strategic options for
maintaining market share?

Strategic Options for

Maintaining Share in Mature
Markets
Fortress defense

Improve customer satisfaction and loyalty

Encourage and simplify repeat purchasing

Add flanker brands

To fend off aggressive competitors

Pursue niche strategy

If low share competitor

Discussion Question
8. If you are in a mature market, what
are your strategic options for
growing the market

Strategic Options for Growing a

Mature Market

Increased penetration: adding new users

Line extensions
Systems selling
Added value services
Expand distribution
Extended use: adding new uses or increasing
frequency of use
Move product inventories closer to point of use
Offer additional package sizes or designs
Sales promotion programs
Line extensions
Develop and promote new uses

Strategic Options for Growing a

Mature Market

Market expansion: add new geographic

or customer segments

Develop a differentiated flanker brand

Develop multiple line extensions
Produce private labels
Design marketing campaigns that address
specific interests of potential customers
Build unique distribution channels
Enter global markets
Domestic less developed well developed

Discussion Question
9. If you are in a declining market,
what are your strategic options and
under what circumstances might
each option be more likely to
succeed?

Strategic Options for

Declining Markets

Divest or Liquidate (barriers?)

Harvest
Maintenance
Profitable survivor
Niche

Strategic Options for

Declining Markets

Divest or Liquidate (barriers?)

Sell the business sooner the better

Harvest
Maximize short-term cash flow; reduce
expenses to minimum; increase efficiencies

Maintenance
Maintain share in short term

Strategic Options for

Declining Markets

Profitable survivor
Increase share of the declining market with
an eye to future profits
Encourage weaker competitors to exit
Become industry leader

Niche
Focus on strengthening position in one or a
relatively substantial segments with
potential for future profits

Six Major Product Deletion

Strategies

39

Announce deletion decision publicly

Discontinue the product by holding a public sale
of assets (buildings, land, raw materials, work in
process, and finished goods).
Discontinue product, but make no public
announcement
Bid high on quotation requests to avoid getting
new orders.
Become a contract manufacturer
Discontinue sales effort, but keep production
facilities. Sell product to wholesalers and
retailers as private-label purchases.

Six Major Product Deletion

Strategies

Divest
Combine all the operations into a subsidiary;
then offer the subsidiary for sale.

Become a sales agency

Discontinue manufacturing, Buy the product for
resale from a foreign supplier or former
competitor, but continue selling operations to
satisfy customers.

Sell Know-how
Sell machinery, tools, and parts to a firm
(domestic or foreign) in a noncompeting or
competing area.

40

Some Advice for

Marketers in Mature
Markets

Dont give up - think strategically. Most of

the worlds leading companies and brands
serve mature markets.

A key imperative: maintain the satisfaction

and loyalty of existing customers

Find avenues for market growth: someone

will, so it might as well be you!

Some Advice for

Marketers in Declining
Markets

Again, dont give up - think strategically.

Money can be made in declining markets,
depending on market conditions.

Others desire to exit can be your chance

to grow, if you believe the market will
survive. Look for opportunities to acquire
your competitors for little or no cash. This
can improve industry attractiveness.