Introduction In today’s business world competition has highly become competitive, budget-oriented planning or predict-based planning approaches are not sufficient for a big corporation to survive and flourish. Porter (1985) clearly states that, for a company to survive and flourish in this competitive business world, it has to engage in strategic planning or management which clearly defines its objectives and examines both the inner and outer situations to formulate a strategy, implement that strategy, evaluate its progress, and make any adjustments where necessary to stay on the track. Mature MarketsMature Markets are inevitable however, Porter (1985) points out that Managers of middle-market companies frequently whine regarding how the markets in which they are competing have ‘become highly competitive. ’ In their observation, customers now do not have the loyalty they previously did.
They show frustration that regardless of how much they cut down at costs, it doesn’t appear to be adequate. These reactions are particularly voiced amongst those managers who one time competed within newer, higher growth markets. (Porter, 1985) Yes, as markets mature, competition in the industry gets tougher. Growth of companies slows however, at least at the outset; there is no drop in the number of competitors.
On the other hand customers grow to be more demanding. In such situation the only aspect which appears to matter is how much further the price of products can be decreased. This does not essentially have to be the situation if a company is in a mature market. There are several different and advantageous approaches a company can take. Though mature markets may possibly be unavoidable, mature companies are not. At times managers frequently attribute, incorrectly, a slow in sales to short-time economic setbacks.
Distinguishing the realities of a company’s market place is the primary step in making adjustments to assists in growth of your business. (McGahan, 2004)In this study paper, we will outline the symptoms of mature markets and, more importantly, what a company can do about it. We shall use Starbucks as an example and analyze the steps the company has done. As noted before, markets and products might mature however companies need not to mature. Symptoms of mature marketsThere are several market symptoms but the following ones are the main onesMarket growth slows; however the number of competitors in the industry does not directly change.
Margin pressures go with slowing profits. Though a company may not want to get engaged in price battles, pricing demands coupled by lack of product differentiation forces a company to do so. The focus turns into nearly exclusively on reducing expenditures. (Grant, 2005)Internal dialogue in the company boardrooms changes. Is there a lot of gnashing of teeth since “customers are just not as loyal as they were in the past? ” Are sales persons saying that the most important aspect which matters to customers is price reduction?
If so, then a company is probably in a maturing market. (Thomson and Rampton, 2003)In less mature industry segments there is normally a lot product differentiation and innovation. The distinctive attributes and benefits a product are the central point of continuous communications. As the market matures the focus slowly moves away from product attributes to non product aspects such as price and also service. (Grant, 2005)Dominant suppliers start to emerge. In many cases, economies of scale are there to be realized, particularly when price (and thus expenditure) is the most crucial factor to customers.
In a lot of markets, in the process of becoming bigger, economies of scale either in the production, marketing, or other aspects can be realized. (Hoyer, 2001)