The Transition to Industry Maturity

Topics: Competition, Marketing, Economics Pages: 1 (258 words) Published: August 11, 2007
The transition to maturity in industries is always a critical period, as fundamental changes take place in the companies' competitive environment. This change require companies to take difficult strategic responses in order retain market share competitiveness. As Slowing demand generates head-to-head competition for market share, buyers are more sophisticated, driving harder bargain on repeat purchases. The companies put greater emphasis on cost & service due to the fact that in this transition to industry maturity, firms have "topping out" problem in adding production capacity. As product innovation & new end-use applications harder to come by, companies in the lower end resort to capturing or selling to the experienced and repeat buyers in order to retain target goals. International competition increases, prompting fierce advertising and price wars which in turn cost heavily to the lower end competitors in their transition to maturity. Industry profitability falls due to the over saturated market at this point in time, heavy spending on research and innovation and declining product competitiveness bring about a downward shift in cash flows. Slower rates of market growth causes competitive pressures to intensify, often producing a shake-out of weaker competitors and slimmer profit margins industry-wide. Firms need more strategic planning and emphasize process on innovation to push hard for cost reduction. Find ways to increase sales to present customers as well as maintain repeat customers. Ultimately more firms expand internationally as their local industry matures. Seeking out new markets to gain a foothold and start the industry and market share climb on those countries.
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