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 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, the whole Apple portfolio – 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. But while the Internet is still growing the
market for mobile telephony has passed the initial growth phase as handset
saturation is approached. 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.
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reason for the product need is no longer valid.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.