What is Declining Stage?
The declining stage is the fifth and the last stage of the product life cycle (PLC) where the sales and profits continuously decrease and at some points firms also bear losses. It is a condition where a firm waits to withdraw competitors from the market or leave the market and enter into a new one.
As the saturation period continues, the firm’s sales decrease, resulting in the smallest profit or loss. The firm’s ability to remain sustainable becomes increasingly difficult, and many companies leave in search of new opportunities. This situation normally displays the following situations.
- Firms’ sales are permanently declining as a result of technological advancement, stiff competition, changes in consumer expectations, and so on.
- During the declining period, the number of firms decreased as they exited the market.
- As there is no potential for the company in the market, product offerings become limited.
- Profits fall at first, but as many firms exit the market, the situation of the remaining firms improves.
When firms fail to implement an appropriate product strategy to maintain market share during the maturity stage, sales fall completely due to heavy competition, the emergence of innovative products, the adoption of innovative product technology, or drastic changes in customer tastes and preferences. No extra firm attempts can optimize sales and profits at this time. This situation obliges firms whether to reduce the marketing efforts, refocus on product repositioning, or terminate the product.
In this declining stage, the number of customers continues to decline, many firms withdraw from the market, and product offerings become more limited. The product mix focuses solely on best-sellers and select outlets. Because they cannot afford to use expensive promotional tools such as sales promotion, they put a priority on informative promotional tools.
When a number of companies withdraw their stake in the market and the number of product offerings declines, the competitive power of the remaining companies improves; they gain more customers, and sales and profits increase, just as they did during the growth and maturity stages. This once again assists survivors in regaining market share and a competitive position in the market by earning sufficient profits. However, this occurs only after years of struggle, and only strong companies are able to increase their profit after a period of decline.
Characteristics of the Declining Stage
So far we understood the definition of the declining stage and what happens in this stage. The common characteristics of this can be mentioned below.
- The companies sales and profit is decreasing rapidly.
- The competition is decreasing.
- There is also no competition as the introduction stage.
- Many competitors or firms are leaving the market.
- The number of customers also are decreasing.
- The goal of the firm is to either cut back, revive or terminate the product.
- Customers are no longer willing to buy the existing products.
- The product mix is on best sellers.
- Survived companies again gain their improved position in the market as the maturity stage.
Declining Stage Strategies
The strategies applied in the declining stage goal is to either wait, improve, or enter into to new market. Foremost the main focus is on introducing new products. Following strategies can be implemented in the decline stage.
Product Strategy
As in this stage, there are almost no interests on customers in the existing products, it is advised to the marketer that he should go for searching new opportunities. While searching for new opportunities, there further again need to step in market research, analysis of the market, and coming to the launch of the product after its successful testing and development.
Price Strategy
When the existing product is in the decline stage, there is almost no impact of this strategy. If the new product is again being launched, here it comes to play.
Place Strategy
As price strategy has no work in the decline stage, place strategy has also the same.
Promotion Strategy
Usually, there is no need to give emphasis on promotional activities. However, if needed the emphasis should be given to informative promotion as in the introduction stage.
Market Segmentation Strategy
So far the product has reached the decline stage, here it is better to withdraw the stake from the existing market segment and enter into the new one having great potential.
Competitive Strategy
Since the competition is very low in the declining stage, there is almost no need to focus on setting competitive strategies as in the introduction stage.