Market sophistication is sort of a barometer for figuring out how many marketing messages, tactics and strategies a market has already been exposed to.
Every single market has a different level of market sophistication.
As the market becomes more mature, tactics and strategies will stop working or not deliver the expected results.
Does that mean the market is dead? No, but your marketing tactics are.
To better demonstrate the concept, I’ll be focusing mainly on the fitness industry – it has been pounded to dirt and is one of the most difficult markets to break into.
The 5 Levels of Market Sophistication
Level One – The market is fresh and your product or service is completely new or innovative. This is a pretty rare situation, but if you are lucky enough to be in such a market, the best approach with your claim is to be direct. You don’t need to elaborate your messaging here.
Level Two – There is fierce competition and you need to assert that you’re above the competition.
If your business is in this market, then it’s probably best to look at what ‘1st to market’ are already doing, how they are advertising, what claims they are making, and then enlarging on their claims.
In fitness, the 1st to market must have been claiming “reduce 5 kilos”, the competition came along and said “reduce 5 kilos in 10 days”.
Another thing that happens is the change in marketing terminology – from “fat reducing” to “weight loss diet” to “paleo” – when all of them are the same thing.
Level Three – This is where the problem arises – businesses have already copied the competitors tens of times.
The market repeatedly hears it to the point that they stop believing. Your best claims are like firing bullets on a Kevlar armor!
Even if your ad says “this will float fat right out of your body” – it wouldn’t sell your product.
This is one of the drawbacks of the so-called “competitor analysis”. Most marketers get stuck there and are unable to move or break through.
There is awareness of the claims made for your products and services, but not exactly how it all actually works. This is most likely the market situation of your business.
So what do you do when the market is in its 3rd stage of sophistication? Instead of explicitly selling your product you need to market the “how” of your product or service.
You need to shift the tactics from simple competitor analysis (doubling down) and start showing how the product works. Especially how it impacts your customer’s life and helps them achieve their goals and desires.
Something from “floats fat right out of your body” to maybe “blocks the absorption of fat in your intestine.”
Here’s the bad news though.
Your competitor will see what you’re doing, copy it and double down on it – until the rest of the market falls in line and educational content becomes the norm, leaving the best of your customers with skepticism.
Unless you were the 1st to adopt this tactic, simply educating your customers will not cut it.
This is when the market sophistication reaches level 4.
Level Four – It is just a continuation of elaboration and doubling down. Businesses are competing to capture the hearts and minds of the buying public. You have to ensure that the claims you’re making are in fact truthful, or you risk losing trust and business.
Level Five – It’s safe to say your market is completely saturated or nearly dead. Nearly dead because it’s very rare for a market to completely die off.
Customers in the market are fully aware of your product, your competitors, as well as the claims and tactics that you’ve employed so far.
What To Do When Market Sophistication Reaches Level Five
Start bringing in some uniqueness to your content, instead of simply educating your customers about the product like everyone else in your market.
In fitness industry one of these content tilts can be “self-image identification”.
It means, you’re not just telling people about the process of becoming what they want to become, but you’re taking them on a journey with you.
Perception is reality after all!
I really like the example of Kino Body’s, Greg O’Gallagher.
Greg is selling lifestyle not fitness products – his mission statement is “transforming civilians into movie star shape in the simplest way possible”.
He not only delivers on the promise, but makes you self-identify with himself and the rest of his clients, who have found success with his products and training methods.
So summing it up:
- Figure out your market sophistication level before going all in.
- Don’t get stuck in the doubling-down “competitor analysis strategy.”
- If your market is saturated, i.e. “nearly dead”, find your content tilt.