What is your state of readiness to supply your market? Do you anticipate what consumers need or want? Are you prepared to move your customers to the next stage of the market e.g. electric cars or 5G?
To answer these questions you need to know what type of business you are and what is the position of the market life span.
Only with that information at hand can you adopt a market strategy that is appropriate and get that strategy applied with the correct timing.
You need to forecast your environment: Decide at what point you want to grab the market. Do you want to intercept the market at a certain stage of its life span or do you want to lead and direct the market?
This means that there are several types of company in a market. It also destroys the myth that ‘First in is best dressed’. take the early 80’s home video market: Betamax was first to market, and some still consider it a superior quality option, but VHS was able to intercept the market with a cheaper, better distributed product. VHS won the home video format battle and Betamax was consigned to the history books.
Being the prime mover in a market is not always an advantage.
In every market there will be a number of companies and as the market life cycle progresses different businesses will rise to prominence as others decline. Like everything else, markets have entropy.
Businesses in a market can be classified under one of four categories:
- Market Scopers: These are the innovators who create new markets and who operate at the start of the market life cycle. they create new product, services and distribution channels. They have a go to attitude and scope out a market rather than aiming to satisfy it. the following lessons can be taken from Market Scopers:
- Know the state of readiness of consumers for the market, the product or the innovation. Sir Clive Sinclair scoped the market for home computers and had extraordinary success. He tried to scope the market for electric vehicles but did so on false assumptions and the C5 was a disaster.
- Know how big the market is or could become. Focus on realised demand not latent demand.
- Know how the market wants to buy the product. For example, who buys carpets over the internet?
- Know what price the market will bear, so as to maximise returns.
- Market Makers: These businesses operate in the early growth stage of the market. They are the creators of a mass market e.g. Henry Ford with his aim to make motoring a practice for the masses. These businesses generally garner the largest market share and become market leaders. They create ‘best value’ but are often insufficiently agile to withstand the pressure as a market segments. Often these businesses are driven by product development rather than market change. These are growth stage market leaders.
- Market Changers: These businesses aim to move the market elsewhere by forcing their competitors to modify their offer. Market changers are companies like Tesla which has pushed established car manufacturers into the development of electric vehicles. These companies focus on technology and price/quality analysis. They look to provide services unavailable elsewhere. They can force the existing market into decline.
- Market Exploiters: These companies are fast followers of technology. Many ‘market disruptors’ are market exploiters. They take advantage of market fragmentation as disparate segments emerge. They develop ‘new best value’ through branding and new service functionality. Exploiters follow a market follower or market challenger strategy.
Different types of company need to target different market stages for market entry. timing into the market is critical where consumer needs and market segments are continually changing. A major factor is the rate of market progress and its taxonomy. This is how quickly consumers adapt to changing market technology: Do you target early adopters or laggards? You also need to be aware of how quickly consumers change their definition of best value in a market. For example, how many consumers would now buy a car that doesn’t have Wi-Fi or an iPod dock?