For businesses in the maturity phase, growth has slowed, and the focus often shifts from expansion to sustaining market share, maximizing profitability, and finding innovative ways to stay relevant. It is a critical time to evaluate which strategies are still working and which ones need to be adjusted. Here, we will assess some of the most common strategies for businesses in the maturity phase, offering insights into which approaches are still effective and which may need reconsideration.
1. Is Product Diversification Still Worthwhile?
Product diversification is a go-to strategy for many mature businesses looking to rejuvenate growth, especially when the core product or service is reaching market saturation. Diversification allows companies to leverage their existing brand reputation to introduce complementary products. However, not all diversification efforts yield positive results.
What Works: Diversifying into products or services that align closely with your existing offerings can be a successful way to boost revenue. Customers who already trust your brand are more likely to purchase complementary products.
What Doesn’t: Expanding into areas where you have no expertise can be risky. It requires significant time, effort, and capital and may confuse your customer base. For instance, a successful food brand venturing into clothing might dilute the brand’s value and lead to failure.
Verdict: Diversification can be worthwhile, but it must be well-aligned with your core competencies. Consider sticking to areas that resonate with your brand and target audience to avoid overextension.
2. Cost Leadership can be Effective but Limited
Cost leadership, or becoming the lowest-cost producer in your industry, is a popular strategy for mature businesses looking to compete on price. It works particularly well in price-sensitive markets where consumers prioritize value over differentiation.
What Works: Cost leadership is effective when a business has achieved economies of scale, allowing it to produce at lower costs than competitors. This can help maintain market share even when price competition intensifies.
What Doesn’t: The downside is that competing on cost alone may result in razor-thin profit margins and make it difficult to invest in innovation or quality improvements. Relying too much on cost-cutting can also damage your brand’s perceived value over time.
Verdict: Cost leadership can be an effective short-term strategy, but it shouldn’t be the sole focus. Mature businesses should balance cost leadership with investments in product or service improvements to sustain long-term relevance.
3. Customer Retention Programs: The Gold Standard for Maturity
Customer retention is critical in the maturity stage, where acquiring new customers becomes increasingly expensive. Loyalty programs, customer appreciation initiatives, and personalized offers have all proven effective in maintaining customer satisfaction and reducing churn.
What Works: Programs that reward long-term customers, such as loyalty points, exclusive discounts, or personalized services, often lead to higher customer lifetime value. Additionally, gathering customer feedback and acting on it can help strengthen relationships.
What Doesn’t: Overcomplicating customer loyalty programs with too many terms and conditions can have the opposite effect and deter customer participation. Simplicity and transparency are key when developing these initiatives.
Verdict: Investing in customer retention programs is highly effective for businesses in the maturity phase. A well-structured loyalty program can help sustain profitability and secure long-term customer relationships.
4. Operational Efficiency: Necessary but Not Sufficient
Streamlining operations to cut costs and improve efficiency is a staple strategy during the maturity phase. This involves optimizing supply chains, improving internal processes, and utilizing technology to reduce overheads.
What Works: Investing in technology to automate routine processes and adopting lean practices to minimize waste can lead to significant cost savings, enhancing profitability.
What Doesn’t: While operational efficiency can maintain margins, it does little to inspire growth or innovation. If a business focuses solely on cost-cutting, it risks becoming stagnant and losing its competitive edge.
Verdict: Operational efficiency is essential for maintaining profitability, but it must be paired with strategies that encourage growth, creativity, and adaptation to changing market needs.
5. Brand Reinvention can be A Double-Edged Sword
Brand reinvention, or rebranding, is often seen as a way to breathe new life into a mature business. It can involve updating the brand’s visual identity, repositioning the brand in the market, or shifting focus to appeal to a new audience.
What Works: A well-timed and well-executed rebranding can rejuvenate interest in your products and attract a new customer segment. For example, brands that successfully adapt to new consumer preferences, such as sustainability or health-conscious trends, can find renewed relevance.
What Doesn’t: Rebranding that doesn’t align with the company’s values or confuses the existing customer base can do more harm than good. A drastic change can alienate loyal customers, leading to a decline in market share.
Verdict: Brand reinvention can be an effective tool for mature businesses, but it requires careful planning and alignment with both the company’s core values and current market trends.
6. Are Market Penetration Strategies Still Viable?
Market penetration involves increasing the market share of existing products through aggressive promotion or pricing strategies. It is a common approach during the maturity phase when competition is at its peak.
What Works: Offering promotions, discounts, and bundling deals can help attract customers from competitors. Strengthening distribution channels and increasing advertising spend also contributes to reaching a larger audience.
What Doesn’t: Price cuts and promotions, if done excessively, can lead to a “race to the bottom,” where margins are eroded, and long-term profitability is jeopardized. Constant promotions may also lead to customers expecting discounts and refusing to pay full price.
Verdict: Market penetration can drive short-term sales, but over-reliance on discounting is not sustainable. Businesses should also explore non-price-related ways of increasing market share, such as improving customer experience.
Conclusion
For businesses in the maturity phase, success depends on carefully evaluating which strategies are still delivering results and which might be holding you back. Product diversification, customer retention, operational efficiency, brand reinvention, and market penetration are all valuable tools — but each comes with its own set of challenges.
The most effective approach is to use a balanced combination of these strategies while staying true to your core strengths and remaining adaptable to changing market conditions. Mature businesses that can maintain their quality, retain their customer base, and find new ways to innovate are the ones that will thrive in the long run.