Strategic Marketing: Mature and Declining Markets

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Questions and Answers

What is a key characteristic of markets in the maturity stage of the PLC?

High growth rates

Clear competitive advantage

Low prices and high service quality

Replacement sales outweigh first-time purchases (correct)

What is a common strategic trap during a shakeout period?

Expanding product lines to attract new customers

Assuming an early moving advantage will insulate the firm from price or service competition (correct)

Focusing on market share

Increasing prices to maximize profits

What does industry maturity imply about opportunities and technological change?

A abundance of opportunities and rapid technological change

A lack of opportunities and absence of technological change

Only an absence of technological change

Neither a lack of opportunities nor an absence of technological change (correct)

What is a challenge during the transition from growth to maturity?

Anticipating the transition from growth to maturity Signup and view all the answers

What is a common mistake during a shakeout period?

Sacrificing market share in favor of short-term profit Signup and view all the answers

What tends to reduce the number of opportunities for competitive advantage?

But Signup and view all the answers

What is the primary objective of marketing during the peak sales stage of the PLC?

Maximize profits while defending market share Signup and view all the answers

What is a key characteristic of mature markets?

Technology stable and well diffused Signup and view all the answers

What is the focus of segmentation and targeting in mature markets?

Locating profitable segments and wooing good customers Signup and view all the answers

What is the primary opportunity for innovation in mature markets?

Strategic innovation Signup and view all the answers

What is the emphasis on in mature markets?

Economies of scale and differentiation through complementary services Signup and view all the answers

What is the strategy of increasing market share in a declining market by signaling competitors to exit?

Profitable survivor Signup and view all the answers

What is the strategy of maximizing short-term cash flow in a declining market?

Harvesting Signup and view all the answers

What is the strategy of adding new products or services to attract new customers in a mature market?

Market expansion Signup and view all the answers

What is the strategy of reducing investment and achieving higher liquidation in a declining market?

Divestment Signup and view all the answers

What is the strategy of maintaining market share in a mature market by adding new products or services?

Add flanker brands Signup and view all the answers

What is the strategy of encouraging customers to use a product more frequently in a mature market?

Extend usage Signup and view all the answers

Study Notes

Characteristics of Mature and Declining Markets

Mature markets have a slow growth rate, and the industry is dominated by a few large players
In mature markets, replacement sales outweigh first-time purchases, and there is no clear competitive advantage
During a shakeout period, firms may sacrifice market share in favor of short-term profit
Industry maturity does not imply a lack of opportunity, but it tends to reduce the number of opportunities for competitive advantage

Maturity Stage of the PLC

Sales peak, and costs are low per customer
Profits are high, and marketing objectives focus on maximizing profits while defending market share
Product diversification and brand expansion are key strategies
Pricing is focused on matching or beating competitors
Distribution is intensive, and advertising is increased to encourage brand switching

Characteristics of Mature Markets

Opportunities for sustainable competitive advantage are limited
Technology is stable and well-diffused
International competition is intense, and domestic cost advantage is vulnerable
Ease of entry is due to well-developed industry infrastructure and powerful distributors
Emphasis is on economies of scale and differentiation through complementary services

Strategic Innovators

New entrants that disrupt the market, such as CNN in news broadcasting
Existing firms on the periphery that innovate, such as Vans in clothing and shoes
Firms from adjacent industries that enter the market, such as Apple in consumer electronics

Strategies for Mature Markets

Fortress defense to maintain current market share
Adding flanker brands to attack competitors
Pursuing niche strategies to target small-share competitors
Increasing penetration to convert current non-users into users
Extending usage to increase frequency of use among current users
Market expansion to develop differentiated positioning focused on untapped or underdeveloped segments

Strategies for Declining Markets

Divestment to recover investment sooner
Harvesting strategy to maximize short-term cash flow
Eliminating R&D expenses, reducing marketing and sales budget, and reducing production costs
Maintaining market share for the short-term through maintenance strategy
Increasing share of the market through profitable survivor strategy
Signaling competitors that the firm remains in the market by increasing ads and promotion budgets

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Description

Test your understanding of strategies for mature and declining markets, including characteristics, innovators, and common pitfalls. Learn how to transition from market growth to maturity and decline.