The evolution of markets and the dynamics of competition

lucib30 By lucib30, 5th Jan 2017 | Follow this author | RSS Feed
Posted in Wikinut>Business>Starting A Business

In a consumer economy saturated with homogenuos products and inhabited by costumers who are more and more immune to advertising messages, traditional vertical marketing- with its emphasis on market segmentation and brand proliferation- is failing us. But there is a better way to reach costumers, to create innovative products and markets that don’t yet exist and go gain a competitive advantage.

The dynamics of competition

This way is through an entirely different way of thinking-through lateral marketing. Lateral marketing complements traditional marketing by providing an alternative route to generating fresh new ideas. Whereas vertical marketing helps us find increasingly smaller subgroups for which a product might be developed,lateral marketing lets marketers develop an entirely new product that finds as much wider audience. Instead of accepting that your product or service will have a small share of a saturated market,you will find yourself the leader in new markets.

The last decades of the twentieth century were prosperous for most companies in the develop world. Population growth and longer life expectancy meant greater purchasing power. Increasingly sophisticated marketing efforts resulted in greater products trials, repeat purchases and brand loyality. But you can’t expect to use twentieth- century marketing tactics in the twenty-first century to get the same results.

Nowadays, a strikingly high percentage of new products are doomed to fail. Only twenty years ago, the proportion of failures to successes was much lower. Why is it too difficult to succeed now? Because of the breadth of what’s available and what it means. Take the cereal category, which the features dozens of subcategories and varieties, each adressed to a very specific target market: those who watch their weight , who need fibre, who prefer cereal with fruit, who prefer cereal with chocolate and so on. Among milk-based products there are over fifty yogurts competing for shelf space. In any developed country there are several dozen TV channels,leaving little room for one more.

Marketing today isnot the same as it was in the 1960s and 1970s. Today there are products to satisfy almost every need. Costumers’ needs are more than satisfied. They are satisfied.

Companies can continue to segment the market more finely, but the end results is markets too small to serve profitably.
The challenge in marketing today is to fight against fragmentation, saturation and the storm of novelties that appear daily in the market. But recently new business concepts have appeared that are the results of a different creative process from the endless vertical segmentation of yesterday . This process is responsible for cereal bars that can be eaten as a snack or in the morning instead of with milk,grocery stores at gas stations, refrigerated pizza,and yougourt that busy women can carry in a purse.

The new priority must be to find ways to create and launch more successful products. This is the main objective of lateral marketing.

Further complicating picture are the facts that:

1. Distribution of packaged goods is now largely in the hands of giant corporations and multinationals.
2. There are more brands but fewer producers.
3. Product life cycles have been dramatically shortened.
4. It’s cheaper to replace than repair.
5. Digital technology has led to a new range of products and services, including the Internet,global positioning systems and computer and consumer products.
6. Trademark and patent registrations are increasing.
7. The number of varieties of products has increased radically.
8. Markets are hyperfragmented.
9. Advertising saturation is increasing and fragmented media is complicating product launches, making it harder to reach consumers.
10. Claiming conusmet mind space is harder.

Take a look at the one thousand varieties of cereal în a gorcery store cereal aisle. Is there possibly of combination of cereal that has not been dreamed up, developed and displayed?
The cereal category, for example features dozens of subcategories for consumers who watch their wight, want fiber, want fruit in their cereal, prefer cereal with chocolate, want cereal in special shapes and so on.This traditional vertical marketing with its emphasis on market segmentation and brand proliferation ,leads to market that are fragmented and saturated.
The fact that the cereal market is extremely fragmented and saturated, did not prevent a European food company form inventing a completely new cereal product,thanks to some lateral thinking.
The idea needed refinding. Carring around cereal in bags and eating it with your hands wasn’t the best solution.

Traditionla marketing thinking

To underastand how lateral marketing will transform how you market, you must first understand the strenghts and weaknesses of the traditional approach to marketing. Marketing starts by studying costumer needs and figuring out how to satisfy them. Yet many manufacturers forget to focus on needs and instead focus only on selling their products.
Once needs have been identified, the next step is determining who is the market. The market is defined aș the persons or companies who by or might buy the product or services you produce in a given situation to cover a given need. For example, the market of yogurt might be any person older than one year old (age when children start eating yogurts) who is în a breakfast, dessert or snaking occasion.

In turn, every product and service is included in a category and a subcategory. For example, the product „yogurt” belongs in the milk-based foods market and has subcategories such as fruit yogurt. Defining a category for your product is necessary if you want to develop a marketing strategy because you need to know where and against whom you are competing. Market fragmentation leaves little room for new products- which are the key components for companies that want to grow.

Another tactic you can use is „positioning”. Positioning is linked to segmenting. In the case og yogurt, there are brand positioned aș healthier or cheaper or fresher or more natural. Choosing a characteristic and accentuating it gives personality to your brand and makes it more noticeable. n On the other hand, it may olso blind you to innovative new concepts.

Defining need and categorys is important but can also cause problems. By defining needs and cateogries for your products, you necessarily exclude form consideration those you think don’t need your product or service.

Another way you când innovate is through modulation. Modulation- based innovations, consist of variations în any basic characteristic of a given product or service by increasing or decreasing that characteristic. Examples include:
- juices
- detergents
- banking
- couriers.

You can also innovate by size- such as by selling in a large packs and individual serving size. In this case, you never change the product or service , just the volume, intensity or frequency of the offer. Another possibly innovation is through packaging such as chocolates marketed in an array of boxes from simple to extravagant .
Another variation is design-based. The product , container or package and size sold are the same, but the design or look is modified.
All these innovations have a common factor. They consist of continued variations of what the product service is , but do not intend to modify its essence.
The innovations occur within the category in which they compete,since the methodologies for creating them assume a fix market.
These innovations do not create new categories or new markets. The end results is still fragmentation and a small share of the total market.


Market, Market Research, Marketing

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author avatar lucib30
Copywriter,Therapyst Nutritionist

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