Download How Mature is Your Business? A Life Cycle Review

Feature Story: August 2012
How Mature is Your Business? A Life Cycle Review
You can waste time, money, and effort if you don’t understand product life cycles and apply them to your business – even if you’re in a
service industry. Many entrepreneurs believe the cliché that “getting their name out there” is the key to success. They’re wrong. There are
four stages to product (and business) life cycles that you must understand to make your business all it can be.
Introduction
A new product, like a new business, must first be introduced to potential customers. Who can purchase what they don’t know exists?
Similarly, they must learn about your business before you can gain their patronage.
If you’ve recently opened your doors to the public, it’s imperative to educate them. They must learn that you exist, what you can do for
them, and finally, why you can meet that need better than the competition.
Your marketing message at this stage should be focused on these points. Before you pay for advertising, ask yourself what a customer who
has never heard of you will learn from the ad. Naturally, this applies to print, multimedia, radio, and any other channel you may be using.
Imagine walking past a promotional tent that has an attractive logo that reads, “DMS – Solutions for your Business.” On tables, fliers offer
50% off a consultation for customers who schedule one today. Beside the fliers, you discover pens, balloons, and a few other novelties,
all printed with the logo. You can’t find any information about what they actually do for businesses, and their representative is away for
the moment. Do you grab a few pens and continue walking? How much research will the average consumer do to learn more about this
business? The company is investing in getting its name out there, but without educating customers, it’s nearly useless.
Growth
Once you’ve introduced your product or service effectively, your business enters a growth phase. At the point, you have an established client
base because your customers know that you’re available and what you can do for them.
At this stage, you may not need much paid marketing. This is proof of the wonderful “word of mouth is the best advertising of all” adage. If
you want your business to reach its maximum growth, however, your marketing is still important. Instead of focusing on educating people
about your product, though, you’ll need to persuade them to take action on what they know about you.
The example about DMS offered a call to action (CTA) – it invited potential customers to save half the cost of a consultation, but only if
they complete a specific step. To receive a discount, the customer is required to schedule an appointment. If we again pretend that you’re
walking by, but this time, you recognize the DMS company name. You’ve read about them in the local paper and an acquaintance told
(educated) you about how DMS helped them increase their market share last year. You’ve considered calling the company but haven’t
because your friend mentioned that they charged a high fee for an initial consultation. Will you consider waiting for their representative to
return?
Businesses in the growth stage can attract stragglers who have developed an interest but not yet acted with an effective CTA. Further,
existing customers are easily persuaded to respond to a CTA that is easily achieved. You may ask them to bring a friend next time, to offer
you their contact information, or to add an additional item to their purchase. In the growth stage, CTA marketing can boost results.
Maturity
Once a business or product reaches the maturity stage, it is thoroughly branded, instantly recognizable, and well liked by its target
audiences. Very few businesses achieve this level of success. Some, like Coca-Cola or Harley Davidson, have vast target audiences and
market on a national or international level, though it’s equally possible to achieve full maturity within a local marketplace.
A mature business has gained its maximum reach within its sphere of influence. Its customer ranks include many longtime, repeat clients.
They know what they’re going to get when they do business with this company.
The challenge for this company is to prevent competitors from luring its customers. Customer appreciation, loyalty programs, customer
follow-ups, and reminder advertising such as sports sponsorships are most effective for the maturity stage of the product life cycle.
Decline
It’s inevitable. Over a period of years, things change. New competition, improved products and services, and evolving social trends force
businesses to reinvent or expand their offerings to remain competitive. Signs that indicate a company is on its way to obsolescence can
include lower gross sales even if customer retention is unchanged. Existing customers may still buy from you, but have begun spending
elsewhere, too, and spend less per visit now. Your customer base may erode.
Often, customers will tell you what is happening if you ask, so marketing is utterly critical at this stage to discover what your customers
no longer get from you. It’s painful to learn that your showroom is outdated, or that a competitor provides better service or products, but
this valuable information is exactly what you need to reinvent your business in such a way that you’ll attract new customers and retain (or
recover) existing ones.
Surveys, follow-up phone contacts, focus groups, and market trend research can help you identify what your business can do to renew its
life. It may mean revamping product lines, décor, or adding something that is in high demand by consumers in your target market.
Once you respond to your customers’ demands, your marketing will focus once again on the introduction stage. Coca-Cola reached
maturity long ago, and continuously reinvents itself for niche target markets as well as vast audiences. It introduces new products, changes
packaging, uses brand merchandizing, and locates new audiences – including in other countries. Coke’s marketing introduces its new
themes on existing products. It introduces and educates consumers about new products. Yet what it doesn’t do is introduce and educate
about its namesake product, Coca-Cola. Because the beverage is well into its maturity stage in the U.S., Coca-Cola focuses on reminder
advertising for the product itself.
In other words, once your business moves past the maturity stage, you will need to make changes that will be reintroduced, and maintain
methods that continue to work well.
By applying the product life cycle to your business marketing plan, you’ll know what kind of marketing methods will work best instead of
wasting dollars targeting the wrong audiences or using the wrong message.