course hero which of the following is the first stage of decline

What is a declining market?

What Are Declining Markets? Declining markets are markets that have gone from maturity--where sales stay flat or may even climb occasionally--to multiple periods where there are decreasing sales. This drop in sales is the first and most obvious sign of a declining market, and lower sales quickly lead to other attributes.

How to survive in a declining market?

If a firm decides to continue operating in a declining market, they will likely need to adjust their strategy from the one they used during the mature stage. There are four basic strategies that can be used, obviously with some variation, to succeed in a declining market: 1 Harvesting: A harvesting strategy is used when a firm is making good profits in the declining market, but since the market is declining, the company uses those funds to invest in another market. By no longer investing in the declining market, the firm is essentially conducting a slow exit. 2 Maintenance: A maintenance strategy involves keeping profit margins stable, primarily by controlling costs, and focusing on not losing current customers. Growth isn't a primary objective in this strategy. Maintenance is all about not losing ground. 3 Profitable survivor: Using a profitable survivor strategy is feasible when the firm feels the market, or some version of the market, will start to grow again in the future. A profitable survivor focuses on surviving--gaining market share as other firms leave, even at a cost--with the plan of being the veteran firm once the market bounces. 4 Niche: Even in a declining market, there is a segment of the market that will continue producing demand. In a niche strategy, a firm focuses almost exclusively on this niche market, meeting their demands almost exactly and not worrying about other market participants. This is what happened to vinyl records, to return to our previous example.

What is harvesting strategy?

Harvesting: A harvesting strategy is used when a firm is making good profits in the declining market, but since the market is declining, the company uses those funds to invest in another market. By no longer investing in the declining market, the firm is essentially conducting a slow exit.

What is maintenance strategy?

Maintenance: A maintenance strategy involves keeping profit margins stable, primarily by controlling costs, and focusing on not losing current customers. Growth isn't a primary objective in this strategy. Maintenance is all about not losing ground.