What is a Mature Market?
A mature market is one where equilibrium exists and there is a lack of change or innovation. Free market economies operate in a natural cycle. Stages in this cycle include growth, plateau, contraction, and recession. The mature market will exist primarily in the plateau stage, where companies continue to supply a stable number of goods that matches consumer demand. Profits are typically fixed, as there is little incentive to enter new markets in an attempt to grow operations and profits.
Mature markets are not necessarily a bad thing. As long as economic activity continues, there is the potential to earn profits and improve the living standards of individuals within the economy. Larger nations will often take longer to reach a mature market, as there is a significantly higher amount of suppliers and consumers within the market. Nations with more natural resources or material goods can also take longer to reach maturity. This occurs because there are still opportunities for growth and expansion, although some materials may be unsuitable for use in their current state, resulting in unusable goods for the market.
National economies with a mature market will eventually fall into a period of contraction. The lack of change or innovation will retard the economy’s growth because there is no movement to improve the products or materials already in existence. Economic growth occurs when individuals or firms research new materials and find new ways to improve the efficiency of goods. This ultimately improves the utility customers will receive from goods or services sold by suppliers.
Because markets reach equilibrium through the meeting of supply and demand, companies only have partial control of the mature market. Consumers can affect this equilibrium through a lack of spending. A common metric in economic markets is consumer confidence, which measures aggregate consumer belief in the strength of the current economy. Mature markets may have higher consumer confidence levels, as individuals believe their lifestyle is somewhat stable based on the economy. Consumers who begin saving more money than spending it can create a contraction, which will break the mature equilibrium and start an economic decline.
A strong, mature market will often take a longer period of time to shift if left to natural market forces. Government intervention can quickly break the equilibrium, as it can restrict economic transactions through inefficient economic policies. Regulations can create an imbalance where suppliers and consumers cannot act freely, resulting in an economic contraction.
@burcidi-- You're right but companies are aware of the points you talked about. They know that unless they remain competitive by keeping prices low and improving quality, they're going to lose out.
Just because demand and supply are equal in a mature market doesn't mean that new companies will not enter that market. They do all the time! If they can produce the same good at a cheaper price and good quality, they know that consumers prefer them. So they will go into a mature market and drive out other companies that can't compete with them.
If you look at it this way, as long as there is renovation and good prices in a mature market, I think it can last for a very long time. Unless there are some outside factors that change demand and supply.
A mature market sounds like the perfect, the ideal market for goods. The demand stays the same and businesses supply demand perfectly.
But I agree that a mature market cannot remain that way for a very long time because there are so many factors involved in the economy and things can shift very quickly. Even if there wasn't some kind of economic or social crises, I think that consumers might get bored or unsatisfied with products over time, especially if there is no change whatsoever.
And businesses don't really have an incentive to change or improve things because the competition is stable. Since the demand doesn't rise, new companies don't want to enter that market. It just has to break at some point.
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