What’s it: The mature stage is the part of the product life cycle where the sales growth rate slows down (not negative). At this stage, you will see which products are winners and which are losers. Winners get prizes, which can generate ample cash for the company. And, in the BCG Matrix, we name them “cash cow.”
This stage is the final part of a product life cycle before entering the decline stage. Ideally, the company should extend the life of this stage through an extension strategy. That way, it can generate more cash.
What happens at the mature stage
The mature stage’s main characteristic is that sales volumes are still growing but at a slower rate. The closer to the end of the mature, the slower will be the growth in sales volume.
Competition for market share and customers is also more intense. Still, each company will try to do this to sustain sales, either through a price-cutting strategy or through product differentiation. Whether competition leads to price wars or not depends on each product.
Some products are unable to compete and leave the market. That leaves a few players. And, of course, the intensity of the competition will depend on how many companies there are. Suppose there are only two dominant firms, for example. In that case, competition may be less intense because the two may adopt tacit collusion. Such a practice allows both to survive in the market and operate profitably.
At this stage, the primary sales source is from repeat purchases, rather than purchases from new customers.
The addition of new customers is slow day by day as sales have approached the entire market population. Most of the consumers in the target market have used or purchased the product. So, that leaves a few new customers to support sales growth.
The consumer may also be bored with the product and move on to the nearest substitute. They are willing to buy a product if it offers more innovative features.
Some products may fail and exit the market, leaving only a few winners. Although the number of players is less, the competition might remain intense, depending on how many companies survive. Companies will grab each other’s market share to grow sales and profits.
Seizing market share from competitors is a solution to increase sales volume. Slower market growth means fewer opportunities to grow market share through an increase in the number of new customers.
To seize market share, companies not only compete through product differentiation but also through price.
Another solution is to differentiate the product. The goal is to create strong loyalty, generate consumer preferences for their products, and expect competitor’s customers to turn to them. That way, the money will keep flowing to them and not going to competitors.
Product feature enhancement is one way to encourage a preference for their products, apart from promotion and branding. They also try to secure a more intensive distribution to sell products and forge a more intimate relationship with consumers.
Companies, especially market leaders, should make big profits. They generate substantial revenues and low costs.
Their costs should be lower due to a large production volume (better economies of scale) and experience curve effects. The costs are also lower because their equipment might be more productive.
How companies extend the mature stage of a product
Near the end of the mature stage, growth has slowed down. Sales volume is nearing a peak before falling. Existing companies seek to extend this mature phase through an extension strategy. Some of the possible solutions are:
- Refreshing packaging to attract purchases by current customers
- For example, adding additional features by embedding new technologies such as high-resolution cameras for mobile phone products.
- Lowering prices to encourage more repeat purchases
- Increase promotions and advertisements to gain new audiences or alert current audiences
- Targeting new markets, for example selling products overseas