Marketing strategies: maturing stage

At some point, the rate of sales growth will slow, and the product will enter a stage of relative maturity. This stage normally lasts longer than the previous stages and poses big challenges to marketing management. Most products are in the maturity stage of the life cycle, and most marketing managers cope with the problem of marketing the mature product.

The maturity stage divides into three phases: growth, stable, and decaying maturity. In the first phase, the sales growth rate starts to decline. There are no new distribution channels to fill. In the second phase, sales flatten on a per capita basis because of market saturation. Most potential consumers have tried the product, and future sales are governed by population growth and replacement demand. In the third phase, decaying maturity, the absolute level of sales starts to decline, and customers begin switching to other products.

The sales slowdown creates overcapacity in the industry, which leads to intensified competition. Competitors scramble to find niches. They engage in frequent markdowns. They increase advertising and trade and consumer promotion. They increase R&D budgets to develop product improvement and line extensions. They make deals to supply private brands. A shakeout begins, and weaker competitors withdraw. The industry eventually consists of well entrenched competitors whose basic drive is to gain or maintain market share.

Dominating the industry are a few giant firms perhaps a quality leader, a service leader, and a cost leader that serve the whole market and make their profits mainly through high volume and lower costs. Surrounding these dominant firms is a multitude of market niches, including market specialists, product specialists, and customizing firms. The issue facing a firm in a mature market is whether to struggle to become one of the “big three� and achieve profits through high volume and low cost or to pursue inching strategy and achieve profits through low volume and a high margin.

Some companies abandon weaker products and concentrate on more profitable products and on new products. Yet they may be ignoring the high potential many mature markets and old products still have. Industries widely thought to be mature autos, motorcycles, television, watches, cameras were proved otherwise by the Japanese, who found ways to offer new value to customers. Seemingly moribund brands like RCA, Jell-O, and Ovaltine have achieved sales revivals though the exercise of marketing imagination. The resurgence in Hush Puppies popularity in the footwear category is a case study reviving an old, nearly forgotten brand.

Hush Puppies’ suede shoes, symbolized by the cuddly, rumpled, droopy-eyed dog, were a kid’s favorite in the 1950s and 1960s. Changes in fashion trends and a series of marketing mishaps eventually resulted in an out-of-date image and diminished sales. Wolverine World Wide, makers of Hush Puppies, made a number of marketing changes in the early 1990s to reverse the sales slide. New product designs and numerous offbeat color combinations, such as powder blue, lime green and electric orange, enhanced the brand’s fashion appeal. Popular designers began to use the shoes in their fashion shows. Wolverine also jacked the price up from $40 to $70, and showered free shoes on Hollywood celebrities. Once the shoes had garnered enough buzz, the company made them more widely available by distributing them to better department stores. Hush Puppies sales rose from 30,000 pairs in 1994 to more than 1.7 million pairs in 1996. When fashions shifted a few years later, Hush Puppies expanded into sandals and walking shoes, and new international markets, and experienced an all-time sales high in 2002.

A company might try to expand the market for its mature brand by working with the two factors that make up sales volume:

Volume = number of brand users x usage rate per user

It can try to expand the number of brand users by converting nonusers. The key to the growth of air freight service is the constant search for new customers to whom air carriers can demonstrate the benefits of using air freight rather than ground transportation.

Despite the fact that the Academy of General Dentistry touts brushing and flossing as the best methods for fighting tooth decay, only 24% of households use floss. Several oral care marketers see this as a golden opportunity to convert the floss-averse. Aquafresh, owned by Glaxomith Kline, has created Aquafresh Floss ‘N’ Cap which combines toothpaste and floss with a cap that doubles as a built-in floss dispenser. Johnson & Johnson, the market leader in this category, has developed a special handheld Flosser called the reach Access Daily Flosser. Glide, newly acquired by Procter & Gamble and the most recommended brand by dentists, perhaps has the easiest job convincing people to floss; the company got a boost when hygiene-obsessed Jerry Seinfeld used Glide on his hugely popular TV show.

It can also try to expand the number of brand users by entering new market segments. When Goodyear decided to sell its tires via Wal-Mart, Sears and Discount Tire, it boosted market share from 14 to 16% in the first year. In recent years AARP has tried the tack of reaching out to new market segments.