Markets evolve and so should your business if you want to stay on top
A market will go through different stages during its life cycle. From infancy to decline, the way an organization conducts business keeps evolving alongside the development of the market.
The strategies an organization employs during the introduction stage are vastly different from the plans they make for the growth stage. While each stage is extremely challenging to work in, the maturity stage is particularly tricky.
A mature market is one that is characterized by its state of equilibrium. There is stagnation in growth at this time. The market may remain in this state for many years only to decline and fade away eventually. How organizations handle this stage of the market life cycle will determine how much more time they have left in the field.
Impact of a mature market on sales and market share
An organization's offerings can be classified into four categories based on their performance in the market – stars, question marks, cash cows, and dogs. Stars are the key performers that bring in the highest earnings. The question marks are usually products that have been recently introduced and their future is as yet unknown. Cash cows are the products that provide the bread and butter for the firm with their steady, if moderate, earnings. Finally, there are the dogs that incur great losses for the organization.
In a mature market, the cash cows are the only products that make enough money for the organization. Growth in sales can be seen only in this category as people choose to spend on tried-and-tested products. It is imperative that organizations increase the visibility of these products in order to retain existing consumers and persuade prospects to switch from their competitors.
The growth stage will have seen a majority of customers purchasing the organization's products and services. Therefore, there may not be many leads available during the maturity stage. The sales curve will have already reached the peak and will have started its decline.
If the organization is a new entrant, the chances of capturing a share of the market are negligible. The maturity stage is one of the best stages for a player who has been in the industry for a long time. Maintaining market share is no problem if you already have one. However, generating sales can be challenging.
How can organizations grow and survive in the maturity stage?
Here are four steps organizations can take to successfully increase sales and expand market share during the maturity stage.
- Target a particular market segment, preferably the highest spenders. An organization will have multiple market segments they cater to. It makes sense to target various types of consumers during the introduction and growth stages. However, during the maturity stage when sales slow, it makes sense to redouble efforts on the segment providing the highest earnings. By repositioning the product or providing better promotional offers, organizations can spark an interest in this segment by their customer base.
- Focus on your cash cows. Your cash cows are the products that have withstood the test of time and are still bringing in profits. While your star products may be profitable only for a short duration, the cash cows provide a steady flow of income in the long run. Identify these products and invest more monetary and human resources in promoting these products. The one thing managers must remember is that the maturity period is when the late adopter segment may choose to engage with the organization. The cash cow products, being some of the longest surviving products, will be known to the customer, making them the choice of purchase.
- Redesign your product. Despite being in the slow-growth maturity stage, the organization still has a chance to acquire new customers. Product redesigning will help give a fresh look to old products, which will create new appeal for customers. Change the packaging, increase or decrease the size of the product, add a new feature – there are multiple things that organizations can do to existing products to help them generate sales out of the declining market.
- Invest in research and development. Apart from redesigning existing products, adding new products to your portfolio can give you a competitive edge. But one thing to remember is that successful new product development during the maturity stage is largely dependent on the size of the organization, existing resources, duration of time spent in the current market and the needs of the customer base.
Create a complementary or a supplementary product or offer a service that will add more value to the product you are selling. Conduct market research and ask customers for their input. By investing in R&D, you can end declining sales.