mature & declining markets. mature market strategies objective -- “maximize the flow of...

Mature & declining markets

Mature market strategies

• Objective -- “Maximize the flow of profits over the remaining life of the product-market” (p. 447)

• “Maintain and protect the business’ market share” (p. 447)– Fortress defense

– Flanker brands

– Niche strategy


Customer retention & loyalty• Crucial in most mature markets

• Related to satisfaction


• To retain customers, measure:– Expectations– Perceptions– Satisfaction– Behavior

• Retention rate

• Frequency of purchases

• % of total purchases in category


• Market penetration – new users within current markets (increased

penetration)

– new uses for current customers (extended use)

– more usage per consumer (extended use)

• Market development (market expansion)• Product development (increased penetration?)


• Sources of sustainable competitive advantage

– Cost leadership

– Differentiation

Ways to achieve cost leadership (from text)

• No-frills product

• Innovative product design

• Cheaper raw materials

• Innovative production processes

• Low-cost distribution

• Reductions in overhead

Bases for differentiation

• Product differentiation– Features– Performance– Durability– Reliability– Repairability– Style– Design

Bases for differentiation (cont’d)

• Personnel– competence

– courtesy

– credibility

– reliability

– responsiveness

– communication

• High service quality– delivery

– installation

– customer support

Service quality model (p. 444)

Word-of-mouthcommunications

PersonalNeeds

PastExperience

ExpectedService

Service quality model (p. 444)Expected Service

Perceived Service

Service Delivery

Translation of perceptions into service quality specifications

Management perceptions of

consumer expectations

Externalcommunicationto consumersGap 1

Gap 2

Gap 3

Gap 5

Gap 4

Strategies for declining markets (p. 457)

• Harvesting

• Maintenance

• Profitable survivor

• Niche


• Harvesting– Avoid additional investment– Reduce expenditures

• Promotion

• Marketing

• Production?


• Conditions for harvesting– Leading share position– Existing base of loyal customers– Few strong competitors – Future rivalry not intense– Low exit barriers


• Maintenance– Maintain share in short term


• Conditions for maintenance– Leading share position– Future direction uncertain– Few strong competitors


• Profitable survivor– Increase share of market– Encourage weaker competitors to exit


• Conditions for profitable survivor– Slow and steady market decline– Substantial pockets fo demand will continue to

exist– Leading share position– Superior resources or competencies necessary

to encourage competitors to exit– Few strong competitors– Low exit barriers


• Niche– Strengthen position in a profitable niche


• Conditions for niche– Niches will remain in the market– Strong competitors absent from the target

market– Sustainable competitive advantage in niche

mature & declining markets. mature market strategies objective -- “maximize the flow of...

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