Like the product life cycle, complete markets or market sectors can also progress through different stages over time.
At each stage there are different market drivers, so it is important to understand how these market drivers work. During the introductory phase the target audience is small and is characterised by innovators and early adopters. Application of new technologies can often be the driver for new markets. There are plenty of examples of markets served by products that previously did not exist – mobile telephony, the Internet – where early adopters drive the market forward.
In growth markets, the drivers are a constant flow of new users accepting and using the product, as well as an increase in usage rate amongst existing users. The next wave of customers, influenced by the early adopters, join the market and in doing so increase the current target audience as well. Mature markets develop when there is no increase in the total population of users and existing users cannot readily use or consume more of the product. More manufacturers will also have entered the market. In mature markets there will typically be many suppliers, little real product differentiation and pressures on price due to high supply and no growth. Many industrial markets are arguably in this state most of the time, leading to excessive discounting to move the product and with suppliers experiencing falling margins.
Declining markets are usually characterised by a shrinking total population and sometimes a decline in usage as well. This may be caused by a shift to use different solutions or simply the reason for the product need is no longer valid.
At each stage of the market cycle – introduction, growth, maturity and decline – the marketing approach will need to address the target audiences which themselves will change and not be a constant. The proposition to early adopters and opinion formers in helping grow a new market will be quite different to marketing to an audience well familiar with the market, comfortable with the same again, resistant to change but not yet ready to move their allegiance to a new and evolving sector.