Podcast
Questions and Answers
What is a key characteristic of markets in the maturity stage of the PLC?
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?
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?
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?
What is a challenge during the transition from growth to maturity?
What is a common mistake during a shakeout period?
What is a common mistake during a shakeout period?
What tends to reduce the number of opportunities for competitive advantage?
What tends to reduce the number of opportunities for competitive advantage?
What is the primary objective of marketing during the peak sales stage of the PLC?
What is the primary objective of marketing during the peak sales stage of the PLC?
What is a key characteristic of mature markets?
What is a key characteristic of mature markets?
What is the focus of segmentation and targeting in mature markets?
What is the focus of segmentation and targeting in mature markets?
What is the primary opportunity for innovation in mature markets?
What is the primary opportunity for innovation in mature markets?
What is the emphasis on in mature markets?
What is the emphasis on in mature markets?
What is the strategy of increasing market share in a declining market by signaling competitors to exit?
What is the strategy of increasing market share in a declining market by signaling competitors to exit?
What is the strategy of maximizing short-term cash flow in a declining market?
What is the strategy of maximizing short-term cash flow in a declining market?
What is the strategy of adding new products or services to attract new customers in a mature market?
What is the strategy of adding new products or services to attract new customers in a mature market?
What is the strategy of reducing investment and achieving higher liquidation in a declining market?
What is the strategy of reducing investment and achieving higher liquidation in a declining market?
What is the strategy of maintaining market share in a mature market by adding new products or services?
What is the strategy of maintaining market share in a mature market by adding new products or services?
What is the strategy of encouraging customers to use a product more frequently in a mature market?
What is the strategy of encouraging customers to use a product more frequently in a mature market?
Flashcards
Mature Market Characteristics
Mature Market Characteristics
Slow growth, dominated by large players, replacement sales outweigh first-time purchases, no clear competitive advantage.
Mature Market PLC Stage
Mature Market PLC Stage
Sales peak, low costs per customer, high profits, focus on maximizing profit and market share.
Mature Market Opportunities
Mature Market Opportunities
Limited opportunities for a lasting competitive advantage, technology is widely used, intense international competition.
Strategic Innovators
Strategic Innovators
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Mature Market Strategies
Mature Market Strategies
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Declining Market Strategies
Declining Market Strategies
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Shakeout Period
Shakeout Period
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Industry Maturity
Industry Maturity
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PLC
PLC
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Fortress Defense
Fortress Defense
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Harvesting
Harvesting
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Divestment
Divestment
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Niche Strategy
Niche Strategy
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Market Penetration
Market Penetration
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Market Expansion
Market Expansion
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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.
