MARKETING STRATEGY

1. Generic Marketing Strategy of Mature
and Declining Market
Pushpender Singh B-
26
Sumit Patel B-44
Sushant Kumar B-45
Varun Singh B-50
Vijay Pandey B-54

2. Life Cycle

4. Strategic Choices in Mature
Markets
 It is not always easy to tell when a market has
reached maturity
 Variations in brands, marketing programs, and
customer groups can mean that different brands
and market segments reach maturity at different
times

5. Strategic Choices in Mature
Markets
 As the maturity stage progresses, a
variety of threats and opportunities
can disrupt an industry’s stability:
◦ Shifts in customer needs or preferences,
◦ Product substitutes,
◦ Changes in government regulations,
◦ The entry of low-cost producers

6. Strategic Choices in Mature Markets
 Success in mature markets requires
two sets of strategic actions:
◦ The development of a well-implemented
business strategy to sustain a competitive
advantage, customer satisfaction, and
loyalty;
◦ Flexible and creative marketing programs
geared to pursue growth or profit
opportunities as conditions change in
specific product-markets

7. Strategic Choices in Mature
Markets
 Both analysers and defenders can attempt
to sustain a competitive advantage in
established product-markets:
◦ Through differentiation of their product
offering or
◦ By maintaining a low-cost position

8. Strategic Choices in Mature
Markets
 Dimensions of product quality:
◦ Performance
◦ Durability
◦ Conformance with specifications
◦ Features
◦ Reliability
◦ Serviceability
◦ Fit and finish
◦ Brand name
◦ Make

9. Declining Market
 Three set of factors help determine the strategic
attractiveness of declining product markets :
 Condition of demand,
 Exit barriers , and
 Factors affecting the intensity of future competitive
rivalry

10. Declining Markets
 Conditions of demand
◦ Technological advances produce substitutes
often with higher quality or lower cost
◦ Demographic shifts
◦ Change in needs, tastes, or lifestyles
◦ Cost of inputs or complementary products
 Exit barriers
◦ The higher the exit barriers, the less hospitable a
product-market will be

11. Declining Markets
 Intensity of future competitive rivalry
◦ Size and bargaining power of the customers who
continue to buy the product
◦ Customers’ ability to switch to substitute products
or to alternative suppliers, and
◦ Any potential diseconomies of scale involved in
capturing an increased share of the remaining
volume

12. End game strategies for declining industries
 There are four strategies for declining industries which
vary greatly, not only in their goals but also in their
implications for investment
 They must be pursued individually or sequentially
Leadership Strategy
 A company following this strategy tries to reap above-
average profitability by becoming one of the few
companies remaining in a declining industry
 Once a company attains this position, depending on the
subsequent pattern of industry sales, it usually switches
to a holding position or controlled harvest strategy

13.  The underlying premise is that by achieving
leadership the company can be more profitable as
it can exert more control and avoid destabilizing
price competition
 The company’s dominant position will give it cost
leadership or differentiation that allows recovery of
assets even after reinvestment

14. Managers can achieve a leadership position via
following tactical steps:
 Ensure that other companies rapidly retire from the industry
Eg. H.J. Heinz and Gerber Products took aggressive competitive
actions in pricing, marketing, and other areas that built market share
and dispelled competitors’ dreams of battling it out
 Reduce competitors’ exit barriers
Eg. GTE Sylvania built market share by acquiring competitors’
product lines at prices above the going rate

15.  Develop and disclose credible market
information
Eg. Reinforcing other managers’ certainty about
the inevitability of decline makes it less likely that
competitors will overestimate the prospects for the
industry and remain in it
 Raise the stakes
Eg. Precipitating the need of other competitors to
reinvest in new products or process improvements
makes it more costly for them to stay in the business

16. Niche Strategy
 The objective of this focus strategy is to identify a segment of the
declining industry that will either maintain stable demand or decay
slowly, and that has structural characteristics allowing high returns
 A company then moves to gain a strong position in this segment
while disinvesting from other segments
Eg. Armira followed a niche strategy in leather tanning
 To reduce either competitors’ exit barriers from the chosen segment
or their uncertainty about the segment’s profitability, management
might decide to take some of the actions listed under the leadership
strategy

17. Harvest strategy
 Undergoing a controlled disinvestment, management seeks to get
the most cash flow it can from the business
Eg. DuPont followed this course with its rayon business
 To increase cash flow, management eliminates or severely curtails
new investment, cuts maintenance of facilities, and reduces
advertising and research while reaping the benefits of past goodwill
 Other tactics include reducing the number of models produced,
cutting the number of distribution channels, eliminating small
customers and eroding service in terms of delivery time, speed of
repair, or sales assistance.
 Companies following this strategy often have difficulty in maintaining
suppliers and customers confidence, however, and thus some
businesses cannot be fully harvested.

18.  Harvesting tests managers skills as administrators because it
creates problems in retaining and motivating employees
 These considerations make harvest a risky option
Quick divestment Strategy
 Executives employing this strategy assume that the company can
recover more of its investment from the business by selling it in the
early stages of the decline
 The earlier the business is sold, the greater is potential buyers
uncertainty about a future slide in demand and thus the more likely
that management will find buyers either at home or in foreign
countries for the assets

19.  In some situations it may be desirable to divest the
business before decline in the maturity phase
 Divesting quickly will force the company to confront its
own exit barriers, such as its customer relationships and
corporate interdependencies
 For example, a company can arrange for remaining
competitors to sell its products if it is necessary to
continue to supply replacements, as Westinghouse
Electric did for vacuum tubes

20. Strategies for Declining Markets
 Maintenance Strategy
◦ The business continues to pursue the
same strategy that brought it success
during the market’s mature stage
◦ Often results in reduced margins and
profits in the short term

21. Strategies for Declining
Markets
 Profitable survivor strategy
◦ Investing enough to increase share
position and establishing itself as the
industry leader for the remainder of the
market’s decline
◦ The key to the success is to encourage
other competitors to leave the market
early

22.  Strategic Choices in Mature Markets
◦ Differentiation: Superior Quality and/or Service
◦ Low Cost
 Strategies for Mature Markets
◦ Maintaining Share (e.g., fortress defense, flanker brands, niche
strategy)
◦ Extending Volume Growth
 Increased Penetration (Increase Market Share)
 Extended Use (Frequency, New Applications)
 Market Expansion (Market or Product Development)
 Strategies for Declining Markets
◦ Survive
 Harvesting (Short Term)
 Maintenance (Short Term)
 Profitable Survivor (Long Term)
 Niche/Entrenchment (Long Term)
◦ Exit (Divest, Abandon)