Strategies For Mature and Declining Markets Mature Markets

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Strategies for Mature and Declining Markets
Mature markets
Challenges in mature markets
Sustaining a meaningful competitive advantage
Strategies for maintaining competitive advantage

 Development of a well-implemented business strategy to sustain:
➢ A competitive advantage
➢ Customer satisfaction
➢ Loyalty
 Flexible and creative marketing programs geared to:
➢ Pursue growth or profit opportunities
Focus on Customer Value Management
Focus on dimensions of product quality
Offering either superior product quality, superior service or both
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Focus on dimensions of Service Quality
Improve Customer Perceptions of Service Quality
1. Gap between the customer’s expectations and the marketer’s perceptions

 Managers do not always have an accurate understanding of what customers want
 Collect information through customer surveys, evaluations of customer complaints, ethnographic studies
2. Gap between management perceptions and service quality specifications
 Even management understand what customer want, that understanding might not get translated
into effective operating standards.
3. Gap between service quality specifications and service delivery
 High standards must be backed by the programs, resources and rewards necessary to enable and
encourage employees to deliver good service
 Employees must be provided with training, equipment and time necessary to delivery good service
4. Gap between service deliver and external communications
 Example, of the photographs in an advertisement and brochures make the rooms look more spacious
and luxurious then they really are, first time customers are likely to be more disappointed
5. Gap between perceived service and expected service
 This results when management fails to close one o more of the other 4 gaps
 It is difference between a customer’s expectations and actual experience and lead to dissatisfaction.
Marketsdocx/
Methods of maintaining a Low-Cost Position
A no-frills product
Remove all frills and extras from the basic product or service
Innovative product design
Simplified product design and standardized component parts
Cheaper raw materials
Innovative production processes
Spend little on product R&D
Low-cost distribution
Developing lower cost alternative channels
Involves eliminating or shifting to the
customer Reductions in overhead
Focus on customer, satisfaction, retention and loyalty

 Measuring satisfaction
➢ Dis-confirmation of expectations
➢ Emotions
➢ Monitor and promptly deal with any complaints reported to the company’s call center or on
customer blogs
 Characteristics of loyal customers (Improving customer retention and loyalty)
➢ Concentrated purchases - Larger volume and lower selling and distribution costs
➢ Provide positive word-of-mouth and customer referrals
➢ Willing to pay premium prices
 (Are all customer equally valuable?) Study defecting customers in detail
➢ Dealing with less profitable customers
➢ Find ways to increase their lifetime value by increasing the frequency or volume of their purchases
Strategies for Maintaining Current Market Share

 Fortress defence - Involves actions:
➢ Aimed at improving customer satisfaction and loyalty
➢ Intended to encourage and simplify repeat purchasing
Improving the quality of a firm’s offering and reducing cost
 Add flanker brands
Expand product lines
 Niche strategy - Effective when the target segment is too small to appeal to larger
competitors Good or service with features that appeal to a particular minority market subgroup
Marketsdocx/
Strategies for Extending Volume Growth
 Increased penetration
➢ Convert current nonusers in target segment into users
 Extended use
➢ Increase frequency of use among current users
➢ Encourage a wider variety of uses among current users
 Market expansion
➢ Develop differentiated positioning focused on untapped or underdeveloped segments
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Marketsdocx/
Decline markets
Challenges in declining markets
Maximize cash flow and profit over the product’s remaining life
Factors Affecting the Attractiveness of Declining Market Environments
Marketsdocx/
Marketing Strategy and Objectives in Declining Markets
 Harvest
➢ Maximize short-term cash flow - generate cash quickly
Avoiding any additional investment, reduce operation expenses (advertising, promotion), and perhaps raise prices
 Maintenance
➢ Maintain market share for the short-term
Reduce margins and profits in short term. Reduce prices or increase marketing expenses
 Profitable survivor
➢ Increase share of the declining market
Low cost, because other might be harvesting or prepare to exit.
Once the firm has achieved a strong position, it can switch to a harvesting strategy
 Niche
➢ Strengthen share position in one or a few segments
Marketsdocx/
Marketsdocx/
Characteristics of the shakeout period
Market is still growing but the rate of growth starts to decline
Occurs simultaneously with other changes in the market and competitive environment
 Appearance of excess capacity

 Increased difficulty of maintaining product differentiation
 Increased intensity of competition, and growing pressures on costs and profits
Marketsdocx/

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Strategies for Mature and Declining Markets

Strategies for maintaining competitive advantage

Focus on Customer Value Management

Focus on dimensions of product quality

Offering either superior product quality, superior service or both

Improve Customer Perceptions of Service Quality

1. Gap between the customer’s expectations and the marketer’s perceptions

Innovative product design

Simplified product design and standardized component parts

Cheaper raw materials

Innovative production processes

Spend little on product R&D

Developing lower cost alternative channels

Involves eliminating or shifting to the

customer Reductions in overhead

Focus on customer, satisfaction, retention and loyalty

Strategies for Maintaining Current Market Share

Improving the quality of a firm’s offering and reducing cost

 Add flanker brands

Expand product lines

Factors Affecting the Attractiveness of Declining Market Environments

Low cost, because other might be harvesting or prepare to exit.

 Appearance of excess capacity

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