Market maturity

From CEOpedia | Management online

Market maturity is the third stage of the product life cycle. There are alignment of the level of sales in the industry and the level of revenue for product group. Most products on the market today is in this phase. This stage is usually longer than the previous ones.

Market maturity can be divided into three smaller stages:

  • growth maturity - sales growth rate begins to decline
  • stable maturity - sales flattens
  • expiring maturity - sales value falls

Consumers

Consumers at this stage are mostly regular customers, who want to buy proven products or try out the product and resign from further use. This is connected with the fact that there are few new clients, and there is high cost of acquiring them.

Decline in profits is also followed by price competition. Sale becomes very sensitive to the state of the economy and profits depend greatly on cost reduction.

Objectives and activities of enterprises

The most important goal in the stage of market maturity is to maintain its current market position (consolidation of brand trust) by e.g.: sales promotion (contests, discounts, rebates, sweepstakes, etc.) and maintaining or extending distribution channels.

Product markets in this phase are becoming more segmented, so promotion program must be adapted according to a specific segment. Expenditure on advertising and distribution and falling prices contribute to the fact that on the market remains only the strongest manufacturers with established position, reputation or a wide range of additional services. Weaker competitors must withdraw from the industry.

Often in the market maturity stage we are dealing with the modification of an existing product, which leads to transition to the previous market growth stage.

Market maturity phase can be extremely long when the invention is a breakthrough product, the company maintains market leadership or customer tastes and product technology are relatively stable. This phase is followed by a decline in sales growth, which is associated with the saturation on the market and the appearance of the other products which meet customers needs. In this phase, managers should adapt the action specific to the current competitive position.

Proposed actions for companies in market maturity stage

The dominant competitive position:

Strong competitive position

Average competitive position

  • keep company position, find a niche and try to protect it
  • minimum or/and selective investments

Favourable competitive position

Weak competitive position

  • development or gradual withdrawal
  • selective investment or disinvestment

Examples of Market maturity

  • Automobile industry: The automobile industry is in a mature stage of the product life cycle. Automobiles have been around for over a century and the technology has been fairly consistent. There is a large market that is already saturated and companies are focusing on product differentiation and marketing to gain market share.
  • Smartphones: Smartphones are another example of a product in the market maturity phase. Smartphones have been around for a decade and the technology has been relatively stable. There is a large market of users that are already saturated and companies are focusing on product differentiation, marketing, and services to gain market share.
  • Video Games: Video games have been around for decades and the technology has been relatively stable. There is a large market of users that are already saturated and companies are focusing on product differentiation, marketing, and services to gain market share.

Advantages of Market maturity

The advantages of the market maturity stage include:

  • Increased stability and predictability of the market and product sales, as the size and shape of the market are known and established.
  • Lower costs, since the product is already established and the market is competitive, reducing the need for high-cost marketing and advertising campaigns.
  • A larger customer base, as the product is already established and proven, which allows for a larger target market.
  • The opportunity to build a brand, as customers become more familiar with the product. This can help a company differentiate itself from competitors.
  • The ability to gain market share and increase profitability through cost-cutting measures, since the product is already established and the market is established.

Limitations of Market maturity

The limitations of market maturity include:

  • Low growth potential - Few new customers enter the market at this stage, and the existing ones become more resistant to change. As a result, the growth potential is limited.
  • High competition - With the market being saturated, companies must compete for a share of existing customers. This results in increased competition and costly promotional campaigns.
  • Low profitability - As competition increases, profit margins begin to decrease. This can be further exacerbated by the need to constantly invest in research and development to keep up with the competition.
  • Limited strategic options - Companies face limited strategic options at this stage. This is because the market is saturated, and it is difficult to find new ways to differentiate a product or service.

Other approaches related to Market maturity

At the market maturity stage, businesses must take other initiatives to remain competitive. These include:

  • Increasing Brand Loyalty: Businesses should invest in loyalty programs that incentivize customers to stay loyal to the brand and increase their spending.
  • Diversifying the Product Line: Businesses should create new and innovative products that can draw in new customers or satisfy existing customers’ needs.
  • Focus on Cost Reduction: Businesses should focus on reducing their production costs to remain competitive in their price points.
  • Invest in Marketing: Companies should invest in marketing strategies that target the right audiences, such as product positioning, pricing, and promotions.

In summary, market maturity requires businesses to take additional steps to remain competitive, such as increasing brand loyalty, diversifying their product line, focusing on cost reduction, and investing in marketing.


Market maturity — recommended articles
Brand leader — Imitator strategy — Competitive position — Market development — Market follower — Market expansion — Pricing strategy — Concentrated marketing — Penetration strategy

References

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