Declining Markets

Posted in Marketing and Strategy Terms, Total Reads: 949
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Definition: Declining Markets

Declining markets are characterized by declining sales, low cost per customer, declining profits, laggard customers and declining number of competitors.

The concept of declining markets arises from the concept of Product Life Cycle. Here the market for a product is characterized into 4 stages- the introduction stage, the growth stage, the maturity stage and the declining stage.

 

The marketing objective in a declining market should be to reduce expenditure and milk the brand. Weak product should be phased out, prices should be cut, be selective in distribution and phase out unprofitable outlets and reduce communications to minimum level needed to retain hard core loyals.


The reason for declining markets include

• Technological advances

• Shifts in consumer tastes

• Increased domestic and foreign competition


This will lead to over capacity, increased price cutting and profit erosion. Sales may plunge to zero or petrify at a low level.

• Example: some examples of declining markets are market for sewing machines (advancement of technology- invention of electric machines), market for floppy disks and cartridges (again, advancement of technology), market for dhotis (change in customer taste and preference) etc.

 

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