The product life cycle has been part of marketing strategy since the late 50’s. All of us are either intuitively or intellectually aware of its five stages of introduction, growth, maturity, saturation and decline. Yet, this classic model now faces the same inevitability it predicted for brands and market segments. We all face a new reality wherein everyone knows the model, emulates it, then with alarming regularity…fails. Failure comes from the predictability of the strategies that we all believed were dictated by the model. Over the past five years we’ve seen mature core brands suffocate under their own weight like lost, beached whales on the shores of EDLP (every day low price) Beach.
Marketers like Proctor & Gamble and Phillip Morris find themselves in well-published price wars executed under the belief that mature products ultimately come under price point scrutiny. The success of private labels and EDLP policy at retail seem to hold this precept up. Therefore to maintain share of market, the strategy is to coupon, discount or die. That belief came from strategies implied by the product life cycle. That strategy says reap the rewards of your brand equity in the mature phase of your products life cycle. You’ve already invested in R&D, advertising and marketing, now cash in and hold share at all costs even if it means erosion of profits. Now, as market share for brands like Tide and Budwiser wither, we must question the validity of these standard strategies for mature products.
Ironically, the strategies implied by the early phases of the life cycle seem to still hold their validity. Introduction and growth phases are still driven by establishing needs and brand awareness. These early phases are also traditionally where most creativity and corporate resources are applied in the execution of the model’s prescribed strategy. It is mature brands and segments that are troubled and seem to be incapable of finding creative executions of traditional strategies. “Me too” products, new sizes, more shelf space, and other non-benefits (new “improvements” that have no value to the end-user) as well as discounting and couponing, are failing miserably as tactics to revive saturated and declining brands, segments and categories. These classic tactics are doomed to failure, as evidenced by the onslaught and success of private labels and the erosion of market share of many “bulletproof” brands. This reality must force us to rethink maturity. Everyone seems to think Kelloggs is crazy to raise their prices. Flood conditions aside, if these price increases are turned back into marketing resources, Kelloggs could claim unforeseen new market share. They will do this by out marketing their competitors and building new equity into their precious brands rather than strip-mining what is left of their value.
I’m a marketing and media consultant who works primarily with radio stations. Many marketers consider radio to be in the sixth phase of maturity: death. Not so, though I must say that as an industry we have danced in the traffic for some time. We’ve learned quite a bit about maturity in the past 12 years since deregulation hit us. A few truths have begun to emerge as we raise ourselves out of the hangover of debt leverage, and exponential growth in competition from the end of government enforced scarcity.
We learned that heritage means nothing when a more focused niche option arrives. Targeted oldies stations now out number and out bill “mass appeal” Top 40 stations — so much for brand equity. We are learning that more shelf space is not the answer either, as stations take advantage of further deregulation and double up in their markets only to learn they have more to sell and not necessarily more demand. Additionally, buying a station in a market where you already own one only increases the value of the new station 15%–so much for catching up with the rest of the marketing world. But on our steep learning curve we have discovered that there are strategies and tactics to revitalize maturity. In radio, we are learning we must be fundamentally different than our competitors.
Death for mature brands is not a fait accompli. Line extension is still valid. There are two critical factors. First that the originating line is still truly strong, that it still has validity. Second that the extension not simply be better or improved, but be fundamentally and discreetly different from the originating line. Ultimately, line extension is valid only when used properly: as a response to a new competitor in a segment you have established (cola wars) or as a tactic in a strategy to segment a broad-based brand into its emerging niches (Bayer aspirin). Witness market share erosion of Cinch spray cleaner and the roll out of Mr. Clean glass and surface cleaner.
The traditional marketing management techniques for mature products are dead. Price wars, cannibalistic promotional exercises, and shelf-facing politics only temporarily address declining market share. They do not address the root problem: the changed market place and the need that is served by the brand in its current form. Great advertising will only accelerate the death of a declining product if its fundamental attributes do not evolve with the demands of the market. Mature brands must now adapt to market trends with the same speed and accuracy that new entries do. To accomplish that strategy we must apply the same resources and creativity to mature products that we use for new ones. Only then will we be sure our sacred cash cows stay out to pasture and not get slaughtered.
Tom Barnes is CEO of Mediathink , an Atlanta-based media consultancy specializing in marketing strategy and implementation.
