The business dynamics at play in a mature product market is quite different from that of newly introduced products. Companies dealing with mature products will have to employ different manufacturing and marketing tactics than those adopted for trendy products in order to succeed. One of the concerns facing the management is satisfying all involved stakeholders, including shareholders, customers, vendors, and to a lesser extend the society-at-large. Satisfying this diverse group is arduous at the best of times, but it gets close to impossible during an economic downturn or an industry-wide recession. Another handicap facing mature products is that the markets they operate in are likely to be mature as well, making growth prospects for the product as well as industry very tough. The rest of this essay will present various factors that have a bearing on stakeholders when a business is competing in mature product markets.
Shareholders are one of the main (if not the most important) stakeholders to a company’s prospects. And equity markets are the arena where they can hope to claim their rewards. But increasing share price on a consistent and non-volatile manner is very difficult in mature product markets. For example,
“Equity markets both reward companies that outpace growth in their sector and that show significantly higher price/earnings multiples than their competitors. But, since 80 per cent of equity markets grow only as fast as their country’s gross domestic product – that is, at a rate that rarely pushes beyond the low single digits, an organization that seeks to outpace a mature equity market and achieve double-digit revenue growth faces a steep uphill climb. A company can attempt to take market share, but competitors in a mature market will work just as vigorously to defend their customer base. Higher revenue does not always signal success anyway, since revenue gains almost always hurt margins, and can precipitate a price war that devalues the entire market.” (Magrath, 2005)
The telecommunications industry offers opportunities for studying marketability of mature products. This is so because, although digital and satellite communications technology were invented only a couple of decades ago, the rapid rate of growth ensured maturity of both the industry as well as its products. The recent developments in the telecommunications industry in the Middle East illustrates common challenges faced by mature products and mature markets. The quarterly performance of these telecom companies after the first quarter of 2009 shows how growth can be stagnant or in decline for mature product markets. During this period, Saudi Telecom reported a whopping 69 percent dip in its net profit figures. Etisalat, another major firm in the region, reported a 20 percent drop in profits in the same period. Smaller players too, including Maroc Telecom and Zain, performed likewise. (Hadfield, 2009) These examples illustrate how difficult it has become for managements to satisfy stakeholders in a mature product business.