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Chapter 16

Chapter 16. Strategies for Mature and Declining Markets. Strategic Choices in Mature Markets. It is not always easy to tell when a market has reached maturity

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Chapter 16

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  1. Chapter 16 Strategies for Mature and Declining Markets

  2. 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

  3. 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 • Increased raw material costs • Changes in government regulations • The entry of low-cost producers • Mergers and acquisitions

  4. 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

  5. Strategies for Maintaining Competitive Advantage • Both analyzer and defender strategies may be appropriate for units with a leading, or at least a profitable, share of one or more major segments in a mature industry • Analyzer - Appropriate for developed industries that are still experiencing some technological change and may have opportunities for continued growth • Defender - Works where the basic technology is not very complex or is unlikely to change dramatically

  6. Strategies for Maintaining Competitive Advantage • Both analyzers and defenders can attempt to sustain a competitive advantage in established product-markets: • Through differentiation of their product offering • By maintaining a low-cost position

  7. Exhibit 16.1 - The Process of Customer Value Management

  8. Methods of Differentiation • Dimensions of product quality: • Functional performance • Durability • Conformance with specifications • Variety of features • Reliability • Serviceability • Fit and finish • Quality reputation of the brand name • Equity

  9. Methods of Differentiation • Dimensions of service quality: • Tangibles • Reliability • Responsiveness • Empathy • Assurance

  10. Are the Dimensions the Same for Service Quality on the Internet? • Online service quality - The extent to which a website facilitates efficient and effective shopping, purchasing, and delivery

  11. Exhibit 16.4 - Determinants of Perceived Service Quality

  12. Methods of Maintaining a Low-Cost Position • Means for obtaining a sustainable cost advantage: • A no-frills product • Innovative product design • Cheaper raw materials • Innovative production processes • Low-cost distribution • Reductions in overhead

  13. Customers’ Satisfaction and Loyalty are Crucial for Maximizing Their Lifetime Value • Measuring customer satisfaction • To gain the knowledge necessary to continually improve the value of their offerings to customers, firms must understand how satisfied existing and potential customers are with their current offerings • Improving customer retention and loyalty • This is especially true as markets mature because loyal customers become more profitable over time

  14. Customers’ Satisfaction and Loyalty are Crucial for Maximizing Their Lifetime Value • Are all customers equally valuable? • The ability of firms to tailor different levels of service and benefits to different customers based on each person’s potential to produce a profit has been facilitated by the growing popularity of the Internet • Increased stratification of consumer society: This raises ethical and strategic questions

  15. Chapter 17 Organizing and Planning for Effective Implementation

  16. Marketing Plans: The Foundation for Implementing Marketing Actions • Preparation of a written plan is a key step in ensuring the effective execution of a strategic marketing program because it spells out what actions are to be taken, when, and by whom

  17. Exhibit 17.8 - Contents of an Annual Marketing Plan

  18. The Situational Analysis • Market situation - Data are presented on the target market • Competitive situation - Identifies and describes the product’s major competitors in terms of their size, market share, product quality, marketing strategies, and other relevant factors • Macroenvironmental situation - Describes broad environmental occurrences or trends that may have a bearing on the product’s future

  19. The Situational Analysis • Past product performance - Discusses the product’s performance on such dimensions as sales volume, margins, marketing expenditures, and profit contribution for several recent years • Sales forecast and other key assumptions - Typically includes estimates of sales potential, sales forecasts, and other evidence or assumptions underlying the plan

  20. Key Issues • After analyzing the current situation, the product manager must identify the most important issues facing the product in the coming year • These issues typically represent either threats to the future market or financial performance of the product or opportunities to improve those performances

  21. Objectives • Financial objectives: Provide goals for the overall performance of the brand and should reflect the objectives for the SBU as a whole and its competitive strategy • Marketing objectives: Specify the changes in customer behavior and levels of performance of various marketing program elements necessary to reach the product’s financial objectives

  22. Marketing Strategy • The manager must now specify the overall marketing strategy to be pursued • The chosen strategy should fit the market and competitive conditions faced by the product and its strategic objectives • It should also incorporate all of the necessary decisions concerning the 4Ps

  23. Action Plans • The most crucial part of the annual marketing plan for ensuring proper execution • The specific actions necessary to implement the strategy for the product are listed, together with a clear statement of • Who is responsible for each action • When it will be done • And how much is to be spent on each activity • Specific timelines and milestones are set forth

  24. Projected Profit-and-Loss Statement • The action plan includes a supporting budget that is essentially a projected profit-and-loss statement • This budget is then presented to higher levels of management for review and possible modification • Once approved, the budget serves as a basis for the plans and resource allocation decisions of other functional departments within the SBU

  25. Contingency Plans • The manager might also detail contingency plans to be implemented if specific threats or opportunities should occur during the planning period

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