Industry Changes Resulting from Market Maturity

1.   An industry’s transition to maturity does not begin on an easily predicted schedule.

2.   When growth rates do slacken, the onset of market maturity usually produces fundamental changes in the industry’s competitive environment:

a.   Slowing growth in buyer demand generates more head-to-head competition for market share

b.   Buyers become more sophisticated, often driving a harder bargain on repeat purchases

c.   Competition often produces a greater emphasis on cost and service

d.   Firms have a topping-out problem in adding new facilities

e.   Product innovation and new end-use applications are harder to come by

f.    International competition increases

g.   Industry profitability falls temporarily or permanently

h.   Stiffening competition induces a number of mergers and acquisitions among former competitors, drives the weakest firms out of the industry, and produces industry consolidation in general