Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Strategies for Mature and Declining Markets 10 C H A P T E R TEN

10-2 Strategic Challenges oChallenges in mature markets oSustaining a meaningful competitive advantage oChallenges in declining markets oMaximize cash flow and profit over the product’s remaining life

10-3 Common Strategic Traps During a Shakeout Period oFailure to anticipate transition from growth to maturity oNo clear competitive advantage as growth slows oAssumption that an early advantage will insulate firm from price or service competition oSacrificing market share in favor of short-run profit

10-4 Success in Mature Markets oTwo strategic actions: oDevelopment of a well-implemented business strategy to oSustain a competitive advantage oCustomer satisfaction oLoyalty oFlexible and creative marketing programs to oPursue growth or profit opportunities

10-5 The Process of Customer Value Management Exhibit 10.2 The Process of Customer Value Management Understanding customer needs in a well-defined market Effective design and quality control Superior quality in areas that matter to customers Advertising and other marketing communications Low cost of quality and overall cost leadership Market-perceived quality Exceptional customer value Business results profitability, growth, and shareholder value Source: Reprinted with permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group from Managing Customer Value: Creating Quality and Service That Customers Can See by Bradley T. Gale. Copyright © 1994 by Bradley T. Gale. All rights reserved.

10-6 Dimensions of Product Quality oPerformance oDurability oConformance with specifications oFeatures oReliability oServiceability oFit and finish oBrand name

10-7 Dimensions of Service Quality oTangibles oReliability oResponsiveness oAssurance oEmpathy

10-8 Determinants of Perceived Service Quality Exhibit 10.6 Determinants of Perceived Service Quality Customer Marketer Source: Reprinted with permission from Journal of Marketing, published by the American Marketing Association, A. Parasuraman, Valerie A. Zeithaml, and Leonard L. Berry, “A Conceptual Model of Service Quality and Its Implications for Future Research,” Fall 1985, p. 44. Word-of-mouth communications Personal needsPast experience Expected service Perceived service Service delivery (including pre and postcontacts) Translation of perceptions into service quality specifications Management perceptions of consumer expectations External communication to consumers Gap 5 Gap 3 Gap 2 Gap 4Gap 1

10-9 Methods of Maintaining a Low-Cost Position oA no-frills product oInnovative product design oCheaper raw materials oInnovative production processes oLow-cost distribution oReductions in overhead

10-10 Strategies for Maintaining Current Market Share oFortress defense oAdd flanker brands oPursue niche strategy

10-11 Strategies for Extending Volume Growth oIncreased penetration oConvert current nonusers in target segment into users oExtended use oIncrease frequency of use among current users oMarket expansion oDevelop differentiated positioning focused on untapped or underdeveloped segments

10-12 Marketing Actions for Accomplishing Growth Extension Objectives oIncreased penetration oEnhance product’s value by: oAdding features, benefits, or services oIncluding it in the design of integrated systems oStimulate additional primary demand oExtended use oMove storage of the product closer to the point of end use oEncourage larger volume purchases oStress basic product benefits for a variety of usage oDevelop line extensions

10-13 Marketing Actions for Accomplishing Growth Extension Objectives (continued) oMarket expansion oDevelop: oDifferentiated product line oMultiple line extensions oBuild unique distribution channels oDesign service programs

10-14 Factors Affecting the Attractiveness of Declining Market Environments oConditions of demand oExit barriers oIntensity of future competitive rivalry

10-15 Strategies for Declining Markets oHarvest oMaximize short-term cash flow oMaintenance oMaintain market share for the short-term oProfitable survivor oIncrease share of the declining market oNiche oStrengthen share position in one or a few segments

10-16 Marketing Actions for Strategies in Declining Markets oHarvesting strategy oEliminate R&D expenditures and capital investments oReduce marketing and sales budgets oReduce production costs oRaise price if necessary to maintain margins oMaintenance strategy oDesign service programs oContinue trade promotion oFocus salesforce efforts oLower prices if necessary to maintain share

10-17 Marketing Actions for Strategies in Declining Markets (continued) oProfitable survivor strategy oSignal competitors oIntroduce line extensions oLower prices if necessary to increase share oConsider agreements to produce replacement parts oNiche strategy oContinued product and process R&D oProduce for private labels oFocus advertising, sales promotion, etc oMaintain distribution channels