"I'll grow you if you'll grow me" - Strategic Marketing Ideas for Mature Businesses
by Anne Yeiser
Stop being driven by the competition and start teaming up with customers you can grow! That is the message mature businesses need to hear according to Recompetitive Strategies by Mack Hanan. Stop trying to plan FOR customers- they can only be planned WITH. Find ways of integrating your growth objectives and strategies with theirs!
These methods have worked for many Fortune 500 companies whose profits were declining, according to Hanan who is an internationally recognized consultant, author and lecturer on marketing, sales and business growth.
Growth followed by maturity followed by decline is not inevitable in the life cycle of a product, says Hanan. In the recompetitive model, maturity is followed by rebirth of growth, and the good news is: "The profits from recompetitive growth can, and most of the time do, exceed the profits from new growth, in their rate of return and very often in volume as well."
Hanan's insights are based on his consultation and research for large manufacturers and retailers, but they will be appreciated by any size firm seeking a new burst of growth, whether selling services or products. The only mature businesses which he has found not eligible to recompete are those with obsolete technology or "old school" managers.
Recompetitive Strategies states that efforts to restore competitiveness to old products usually focus on:
- enhancing the product (usually unnecessary),
- selling harder to current customers,
- expanding sales to new customers, and
- entering allied markets.
Hanan calls this "rouging the cheeks of the corpse."
The mature business should instead undertake:
- market concentration
- asset base shrinkage, and
- product redefinition.
Market concentration means focusing on the customers who contribute the most profits. The ones willing to pay a premium price are those whose profits are being increased by their relationship with the mature business. It is crucial to understand their business and why yours is prospering theirs. They and new customers whose businesses can be grown are the mature business's "growth niche," according to Hanan. "Competitive maturity begins with one market-narrowing question: Whom can we grow?" The number of customers forming the growth niche may be only 20% of the total customer base. The remaining 80%, not to be ignored, are not a primary focus.
Asset base shrinkage, the second rule for becoming recompetitive, refers to the downsizing of product lines to those which best contribute to improved customer profits and those which still can be profitably mass marketed.
Product redefinition means replacing the tangible product or actual service with a financial product-- the profits it offers the customer's business. "[Profits] are the only true tangibles in any business transaction," says Hanan. "When profits instead of products are offered, price can be detached from product benefits and attached to their dollar benefits." This is how prices may be justifiably raised.
Hanan also outlines how to internalize customer data in order to merge into problem-solving partnerships with customers, how to re-train and reorganize for "consultative selling," how to price profits (not products), and how to identify customers who will be growth partners.
By permission of publisher from RECOMPETITIVE STRATEGIES, by Mack Hanan ©1986 AMACOM. a division of American Management Association, New York. All rights reserved.