Advertising blindly to a broad market is typically one mistake small businesses initially make. Creating a model of your ideal customer is important to know who you’re marketing to. That’s one way of defining how you’re going to approach your marketing strategies.
Another way, which is what we’re going to expand on in this article, is to know where your business stands in the market. You can find that out by knowing what’s called the market sophistication.
What is Market Sophistication?
Market sophistication is the saturation of the market you’re trying to break into to the product you’re offering. It ascertains how many similar products there are already in the market. This information can be the basis of how aware the market is of similar products that have the same offer as yours. Then you can use that to your advantage by altering your offers, more specifically the words you use to advertise your product or service.
There are 5 stages of market sophistication. We’ll unpack what those 5 stages are and also give you the actions to do to polish your direct response marketing efforts depending on what stage your business is in. Have your pens and notebooks ready, you might want to take notes.
1st Stage: Pioneering Stage
The first stage is the easiest because you are the prime mover, the pioneer. Your product is unique to your location or market. It’s unlike anything they have ever seen before. There are likely no competition at this stage. If there are, they may cater to a different target location, or for any other reason, they just don’t clash with your own market.
At this stage, you can dominate the market. However, you still have to sell your product.
Plan of Action: Offer up a direct claim.
Example: “How to Lose Weight Without Working Out”
For this stage, this headline makes a direct claim that the customer can lose weight without working out. From here, if a person becomes a lead, the company or business owner can then proceed to introducing the unique product (diet pill).
For the examples in the first four stages, we’ll use weight-loss products as the model to create headlines that adhere to the corresponding stage of market sophistication. They may be exaggerated only to demonstrate and none are taken from any real situation.
2nd Stage: Glow Up Stage
We called the 2nd stage of market sophistication as the “Glow Up” stage because it’s a little improvement from the first. At this stage, the market has proved to be a thriving market. There are some competitors, though not too many for the market to be too saturated with your product and/or service.
At this level, it’s going to take only a little more challenge but you can still dominate the market. That will depend on how good your marketing strategies and claims are.
Plan of Action: Make your claim or offer bigger.
Example: “How to Lose Weight in 30 Days Without Working Out”
Notice how nothing this headline still makes the same claim as the first one. Only now it’s more appealing because of the added 30-day timeframe for the product to fulfill the claim.
3rd Stage: The How Stage
As more companies come into the market, there are more competition, therefore more claims to battle with for people’s attention. People don’t believe in direct claims anymore because they’ve heard them all already.
At this stage, people don’t want to just know what your product is. They are probably well-aware of it by now if the market sophistication is at this stage. They likely want to know how your product is going to fulfill the desired effect it promises.
Plan of Action: Propose a mechanism.
Example: “How to Balance Diet and Exercise to Lose Weight in 30 Days”
You are always making claims, but instead of it being the star of the headline, the mechanism becomes the attention-grabber. In this case, this headline could be coming from a nutritionist-slash-trainer who is offering a diet and training course, which is the mechanism. Make sure it’s something that people are willing to try. The newer it is, the more you can hype up people’s curiosity for it.
4th Stage: The Competitive Stage
The fourth stage is where the market is starting to become a little saturated. There are more competition than ever, and more are still being introduced in the market. They aren’t only making claims, they’ve also tried offering up a new mechanism.
At this stage, the stakes are not completely hopeless. You can still achieve significant business growth here, but this is the level at which you need exceptionality and specialty to break the market and create an impact.
Plan of Action: Make better mechanisms.
Example: “How a 432-Pound Woman Lost Weight With Intermittent Fasting”
In this case, intermittent fasting is the better mechanism on offer. It has the “instant” which almost everyone is into nowadays. Everyone wants instant results and definite plans. Intermittent fasting has some stiff rules which explains how it’s going to help a person lose weight. This is what people want to hear, and will be what compels them to get on board.
5th Stage: All Noise Stage
At this stage, very few companies — only the big dominating ones— are making a resounding impact on the market. For the average consumer, it’s all noise, thus the name.
The market at this stage is supersaturated. The people are excessively aware of the product available and companies that offer them. It’s hard for them to believe in claims and mechanisms, which in turn, makes it harder to sell.
Plan of Action: Make your product resonate with people.
Example: Nike's "Dream Crazier" Ad
This is one of the best examples of an ad for this level of market sophistication. Usually the companies that compete at this stage are the big corporate ones that has already existed for years if not decades. The only way to instigate a reaction is to resonate with your customers’ desires.
Determining what level of market sophistication your business is in is just as important in knowing how to advertise your products or services to your target market. Add this step to your market research to make the most of your marketing efforts.