Hello, marketers. Look at your market, now back to mine, now back at your market, now back to mine. Sadly, your market isn’t mine, but if you stopped using inappropriate mature market strategies and switched to these, your mature market could be doing as well as mine.
The product life cycle is an important concept for marketers understand. After all, all companies have products that belong to categories that emerge, grow, and (hopefully) mature. The ability to diagnose which category your market is in is important for prescribing a strategy for maintaining market share and remaining profitable.
“…the most commonly cited reason for executive failure in mature markets is denial that the market is mature,” writes Jeffrey Kovach in “Managing in Mature Markets.” There are dangers with mature markets. Many companies are tempted to milk the brand for all they can since they view a mature market as tapped out. As Kovach points out, that attitude takes a brand perceived to be dying and kills it instead of nurturing it and allowing it to survive. Obviously only the latter creates long-term profits.
So what are some clues that your industry is no longer in the growth stage? Hamish Pringle says that mature markets are “characterized by entrenched, aggressive competition and often declining margins” in his article “Survival Tactics.”
Here’s a simple checklist to determine if a market is mature:
-Competition: Lots, and some dominant front-runners. Private label. Vertical integration. Mergers/Acquisitions.
-Consumer Knowledge: The product category is well-known. It’s been around, no longer making the news.
-Current Market: Channels are pretty full. Hard to get new product into a store. There are already many different products in the segment.
What’s a company to do if they’ve identified that their market is indeed mature? Kovach lists the following prescriptions: “cost-cutting programs, product and managerial innovation, better customer service, or more effective employee-reward systems.” The goal in mature markets is to maintain market share, continue to innovate so that customers don’t have a reason to switch to another brand, reward customers for their loyalty to your brand, and to use marketing to create emotional branding.
Let’s see how these theories for thriving in a mature market have successfully been put into practice in two different mature markets.
SodaStream is a 104-year-old company based in Israel. For much of its history, it marketed to high-end consumers and manufactured commercial carbonation machines mainly in the seltzer water category. In the ‘70s and ‘80s, the brand experienced a surge of popularity in the UK due to a new tagline “Get Busy with the Fizzy” and ads targeting mainstream consumers.
SodaStream began positioning themselves more strategically in the highly competitive soda category. There are plenty of private label competitors since the market is so mature, and hugely competitive front-runners Coke and Pepsi have been vying for market share in the category for decades.
When Daniel Birnbaum became CEO in 2007, he reinvigorated the brand by making a few strategic decisions. First of all, he continued to innovate. He designed a better product. The new SodaStream machine has won design awards and continues to be functionally superior. “I realized the whole mind-set of the company had to shift from industrial to consumer oriented. The first thing we did was change the mind-set of the product from functional to lifestyle—an object of desire.”
He also decided to once again take on the soda category, explaining that the market is 80 times what the seltzer water market is. He immediately grew his market by refocusing on a much larger segment of beverage purchasers. After research, the company discovered that “consumers want a healthier soda.” They developed “more than 20 natural syrups and essences that don’t use high-fructose corn syrup or Splenda” and Diet Cola is their number one seller in the US.
Awareness of changing consumer attitudes also helped them market in a way that drew in more loyal consumers. Increased consumer concerns about health, sustainable products, and cost-savings in this rough economy enabled SodaStream to successfully market features their product already possessed. For example: the machine produces less waste with reusable containers than soda bottles and cans would. The product is convenient because you make the soda at home, and can make any flavor you want as long as you have the syrups and CO2 on hand. The actual machine is not expensive (due to the razor blade model of business they make more money off CO2 refills, syrups, and bottles) and so consumers eventually pay less than if they were buying soda. Also, the syrups are healthier for consumers than traditional soda.
The most important side-effect is that once consumers buy a SodaStream, they’re basically customers for life. “So it’s not a one-time sale,” says Birnbaum. “The blades are our future revenue stream. We acquire users, build our installed base, and we cultivate those users for life.”
If you ever heard someone say “I’m on a horse” and you weren’t quite sure what they were joking about, you are one of the few who has missed the brilliant campaign to reinvigorate the Old Spice brand.
Old Spice is a men’s grooming product company that began selling aftershave lotion in 1938 and is currently a Procter & Gamble company. The market for men’s grooming product industry was worth $4.83 billion in 2009. (Men’s body spray, included in the grooming category, is a growth category, but mainstays like aftershave and deodorant are inarguably mature markets.)
They decided to launch a new ad strategy during the 2010 Superbowl. Actually the ad premiered the next day, but the company uploaded it online with keywords that would make the ad show up in search results for “Superbowl ads.” Previously, the company had advertised their body washes, aftershaves, and deodorants with a nautical theme. Iain Tait describes the character in the new ads as “this character who is not only loved by ladies, but equally loved by guys. A woman’s man that was okay for men to love. And we realized there were no edges to where he could exist.” Tait is the Creative Director for Wieden+Kennedy the ad agency that made the Old Spice Man ads.
The Old Spice Man, as you’ll see in the video above, is sexy enough to appeal to women, and silly enough to appeal to young men who also want to be sexy enough to appeal to women. It’s a brilliant and odd marketing campaign. Not only are the ads so watchable that people choose to seek them out and share with their friends, but they also purchase products associated with the ads and Old Spice Man character, for example T-shirts that say “I’m on a horse.”
In addition, the same company that created the ads created a social media blitz for two days in the summer of 2010 that produced almost 200 videos responding to Tweets in almost real time. The campaign created excitement around the brand and a considerable amount of press, plus attention on Twitter and Facebook.
One thing was for sure: Old Spice was getting a lot of attention. But was it making an impact on the bottom line?
Before the new ads debuted, at the end of July 2009, Axe dominated the shower gel category with 7.7% market share and Old Spice held 6.2%. By July 2010, Axe was down to 5.9% market share and Old Spice had surged to 10.1% market share. “The success of their social media inbound marketing campaign has seen Old Spice become the No. 1 brand of body wash and anti-perspirant/deodorant in both sales and volume with growth in the high single/double digits according to P&G rep Michael Norton.”
Tait, who worked to create the ads, said “One of the questions that keeps coming up is people saying, ‘OK, this is great, but will it make me buy more Old Spice?’ If you look at the comments that are publicly saying, ‘I’m going to go and try Old Spice after this, I’m going to wear more Old Spice,’ … I don’t know whether that is true or not, if people are actually going to go to the pharmacy and buy Old Spice, …
But I bet a whole load of them are going to go into the aisle and take the top off an Old Spice and smell it. People that may never have done it before. That peer recommendation and seeing that real people are actually talking about this, in a way that not only says they enjoy the entertainment, but that there are smart people in these networks making the connection between the content, the product and the experience of the product.”
What Old Spice has done really successfully is create emotional branding around their product. Now being an Old Spice man isn’t about being a crusty sailor – it’s associated with being a desirable, intelligent, funny man that drives women crazy. The increased exposure has also excited consumers about new product lines that Old Spice has created to stay up to date.
Conclusion
Both SodaStream and Old Spice have remained relevant products in spite of being part of mature market categories by not allowing their products to become undifferentiated commodities. Rather than just lowering their prices and hoping to maintain market share, they continued to innovate and in fact gained market share.
In addition, a key factor of their success was that they differentiated themselves in a meaningful way. They didn’t just create a better product. They made that product into an experience. The benefits of using the products transcended just the use of it – there were also emotional benefits. The Old Spice users felt manly and sexy by associating with the Old Spice man. The SodaStream users felt good about using the product instead of buying soda because they were saving money, being healthy, and helping the environment.
