Why Could a Product in its Decline Stage Still Be Attractive for a Firm?


 
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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.

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