Mature Market Crisis

June 27, 2009 at 1:49 pm 2 comments

hutlogo062409People and companies have disquieting similarities when they hit “the mature years.” Feeling their age, they may clamor for attention and try to gussy themselves up. They insist on being something they’re not, triggering confusion and pity in those looking on. For people, this is often expressed in a midlife crisis replete with plastic surgery, hair coloring, and intentionally impractical red sports cars. The corporate version: the realization that a product or an entire company has reached the mature stage of the product life-cycle, triggering the marketing equivalent of comb-overs and Botox.

Marketing giant Philip Kotler and co-author Gary Armstrong describe the “maturity stage” of the product life-cycle as a time when sales growth slows amid heavy competition and similar products. The maturity stage “poses strong challenges to marketing management.”

We’ve recently seen flailing reactions to such challenges in two major brands. AdAge reports that Pizza Hut is confronting a flattening market for take-out/delivery pizza by expanding its menu and rejiggering its image. It is rolling out “The Hut” at select locations, all the time insisting that it is not jetisoning the “Pizza Hut” name. Branding and marketing expert Laura Ries tweets, “You got to be kidding me? Changing the name to The Hut? What is next? The Dunkin? The King? The Queen? The John?” Brand/line extensions and disregard for brand equity are direct affronts to the Ries doctrines of focus and positioning.

Tropicana Orange Juice’s repackaging was also emblematic of a mature market crisis. Much was made of the re-do of the iconic juice carton by Peter Arnell, “brand architect” and past member of Gawker.com’s “New York’s Worst Bosses.” Arnell replaced Tropicana’s kitschy but instantly recognizable orange-and-inserted-straw logo with a stock close-up of a glass of orange juice. (Yes, I know it wasn’t really a stock image. I’m sure the photo shoot of the brimming glass rivaled the creation of a Mariah Carey album cover.) Results once the Arnell carton hit the cooler: a 20% drop in Tropicana sales. (How’s that for marketing metrics?) Again, the driver for an ethnic cleansing of the brand: a flat market for the product.

Kotler and Armstong outline a number of options for marketers in the maturity stage:

  • Sales promotions and incentives
  • Increased marketing efforts
  • Modifying the market: getting new segments to use your product
  • Modifying the product: a la “new and improved”

Price cuts, bigger marketing budgets, and R&D always threaten the bottom line. Modifying the market is tricky. Kotler and Armstrong cite Johnson & Johnson’s adept marketing of its baby powder and shampoo to adult users. It would be harder to find willing consumers who aren’t already ingesting pizza and orange juice.

Some people accept their their gray hair and wrinkles with dignity. It’s much tougher to get companies to accept their middle age of market stasis. Eking out and maintaining share may be a tribute to steady efforts but is unexciting to ambitious executives and impatient stockholders. There are no easy answers, but there are easy mistakes. An established brand is like the spouse who has stood by you for years. Dumping that brand for something flashier and newer smacks of desperation and lack of appreciation. More often than not, there is a big letdown and a hard road back.

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Entry filed under: Branding, Creativity, Marketing. Tags: , , , , , , , , .

Article in PRNews: United We Stand Fess Up

2 Comments Add your own

  • 1. Dan  |  June 27, 2009 at 2:13 pm

    Given that Pizza Hut is owned by YUM! brands, which also owns KFC, it’s surprising they are going down this road so soon after starting the “Kentucky Grilled Chicken” campaign. Another factor that YUM! should be aware of is how many combined properties of their brands that are out there, such as the Taco Bell/Pizza Huts (or Taco Hut as I like to call it). If too many of the brands are tinkered with, those combined restaurants could be the ones hit the hardest.

    On the plus side, Pizza Hut’s latest tv spots are doing the right thing by promoting value through the giant menus and tiny bills at dinner.

    Reply
  • 2. jasonkarpf  |  June 27, 2009 at 3:47 pm

    Good points about the YUM legacy. KFC is still the poster child for overly hopeful brand makeovers. We are seeing food products threatened with obsolescence as dietary, health and lifestyle trends change.

    Reply

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