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

Product Life Cycle
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Marten van der Zee
Analyst, Netherlands
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 Ga (...) Read more? Sign up for free

 

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