Why Could a Product in its Decline Stage Still Be Attractive for a Firm?
Marten van der Zee, Student (University), Netherlands, Premium Member
The logical thinking seems to be that a company should not stay or invest in a 'decline stage product'. However already in 1983, Harrigan and Porter identified three groups of factors that could indicate that a market may still be attractive during the declining stage:
1. Demand Conditions
Speed of decline is slow; predictability of decline is certain; there are several market niches, there is an extensive product differentiation; premium pricing is followed; prices are stable.
2. Ease of Market Exit
Assets are fully depreciated; there is little excess capacity; there is limited vertical integration; no re-investing.
3. Competitive Rivalry
There are high switching costs and limited customer bargaining power.
This article dates from 1983; are there in the mean time any new insights or explanations that could be added to this list or reasons why companies could still be interested in a declining market?
Source: Harrigan, K.R. and Porter, M.E. (1983) 'End Game Strategies for Declining Industries', Harvard Business Review July 1983, pp. 117