Marketing Strategies: Signs of a Mature Market

By Daniel W. Block
D.W. Block Associates

Most of us have noticed that the seed business has fewer customers, more competition and more consolidation. Those are signs of a mature market that requires more and better skills of our sales and marketing people.

It is crucial that we know what a mature market is and what effect it has on our selling strategies. Essentially, there are no new customers. There is relatively no growth in the class of products.

Some of the signs of a mature market are readily evident in the seed business. For one, there is very heavy and aggressive competition. To meet the demands of the marketplace, an organization must be alert to the competition’s new product developments, changes in distribution, promotion and pricing.

People must be well-trained with high morale. A company must be responsive, flexible and willing to adapt quickly to change. And finally, courageous leadership must be able to see the vulnerabilities in their own firm, as well as in the competition’s, and move quickly to eliminate the former and exploit the latter.

A mature market has noticeable price sensitivity. Most of us have already seen that firsthand. As our products’ differential advantages become slimmer, and customers fewer, there is a tendency to "get the business" by lowering the price.

Companies in mature markets tend to do heavy promotion, including discounting and couponing, etc. Lastly, and certainly in ag inputs, the marketplace seems to be crawling with more salespeople calling on customers with less loyalty to you.

Success in a mature market

Although there are a vast number of options that can be used by any firm to be successful in a mature market, there are a few strategic principles that you should bear in mind:

• Because there is no significant growth in the numbers of customers in the market, and because these customers are controlling larger volumes, you cannot afford to lose your customers.
• There are opportunities for increasing your business without acquiring new customers. The chances are great that your existing customers have needs that you are not presently satisfying.

• In a mature market, customer loyalty is vitally important. The amount of effort necessary to build strong bonds between you and your customer is much greater after the sale is made than before.
• When there are numerous competitors in front of a given customer, the customer will buy from that firm for which he perceives there is the greatest differential advantage.

The first three of these principles indicate that the quality, and possibly the quantity, of the time we spend with our customers must increase.

Getting in touch

Recently, a firm decided to analyze its existing customer list to determine how much of these customers’ business they were not obtaining. With the help of its salespeople, management found out that in many cases they could double the amount of business with some customers.

All they had to do was open their eyes to the other needs of their customers for specific products, they tended to minimize the opportunities for other product sales.

The actions that came from this analysis were two-fold. One was a series of training sessions on the other products in the firm’s product line, and how to sell them; and the second part was an incentive program for the salespeople, to encourage them to sell these other products.

As we’ve discussed before, a good way to differentiate your products, other than what R&D can do by providing unique benefits, is to increase customer service. Better customer service is a strategy for mature markets. It contributes to customer loyalty and sets you apart from other competitors. Toll-free phone numbers, seminars on cultural practices, newsletters, warranties, timely deliveries, or simply having the person that answers the telephone trained to be courteous and cheerful, are all important to greater customer service.

Finally, about customer loyalty. Whether we manage salespeople, or whether we are salespeople ourselves, our one big goal is to make a sale. When we make one, we are elated, and relieved that our work has paid off.

Reducing customer anxiety

The problem for us in a mature market is that once the sale is made and our anxiety has been reduced, we overlook the fact that the customer’s anxiety has increased. The customer is hoping that he made the right decision, and didn’t waste money.

If we don’t stay close to our customers after the sale is made, his anxiety about the purchase makes him vulnerable to being picked off by the competition. One company that became sensitive to this fact began sending thank you letters to new customers and scheduled routine follow-up by the salespeople to monitor the product results with the customer. This simple tactic contributed to reducing customer attrition.

It is nice to have a totally new, innovative product to sell that is in the introductory or growth phase of its life cycle. But firms can be very successful in mature markets if they understand its nature and develop tactics that respond to the needs of customers.