It looks like I may have chosen the wrong product cycle stage in the example I wrote in the discussion. What is finally coming down to is definitely this one: that the market is already mature and the marketing strategy being employed by my example company is based on price, more specifically getting efficiency up while competing in price–yes, a price war.
What initially I had in mind was a product ramping up growth, in which growth is increasing alongside profits. Yes, the company I described may have changed plans several times, but the market it is competing in is still the same market, having the same set of competitors.
Marked by declining profits, the company will play the race-to-the-bottom game in order to grab a slice of the pie, which translates to even more saturation. I have not heard any news from management how this will eventually drive the competition to the ground, and when that happens, I am sure the status quo will change into our favor.
This is the reality being played in the market. Product cycles define the behavior of competing businesses, an environment where there are less winners and significantly more losers.
The example I gave was taken from the real world, my own experience as a developer and close friend of the owners of company. I never thought I would use this one as an example for this class, though. It’s just that it sometimes makes me wonder how the ideas I get from the classroom have significantly widened my view about the realities of business.