The 5 Stages of Market Sophistication

Imagine you’re watching tv and an ad for Verizon comes on pitching their coverage and the newest phone.

“Introducing, cell phone’s. Call anyone from anywhere at any time. Best of all, it fits in your pocket. You’ll never worry about missing a phone call because you’re not home again.”

No Sh*t. Right?

Verizon wouldn’t ever do this, because they understand something that a lot of business owners, beginner copywriters and website designers don’t know.

They understand stages of market sophistication.

And unless it’s 1985 and the first cell phone just came out, Verizon isn’t going to tell me about the benefits of owning a cell phone. It’s been beaten into my brain for the last ten years, and the smart marketers at the cell phone giant know they don’t need to waste their time telling me about the benefits.

Yet, some of you out there are guilty of talking about the benefits.

And I don’t blame you.

You hear the old marketing adage “sell benefits, not features” and you think you’re doing yourself a service by talking about how great it is to use your product or service.

But by doing this, you’re boring me to death, telling me something I already know, and not giving me any good reason to stop and think about paying you money.

But that’s about to change.

Find out what Verizon knows that you don’t, and create compelling, emotional hooks to use in your marketing material that will make your potential customers excited, and even anxious to give you money.

Your marketing messaging will only be effective if you meet your prospect on their level of sophistication.

This level is determined by how many similar products your prospect has heard of before, what claims they are used to hearing, and how long your prospects have been hearing about those claims, or how long they have been using a competitor’s product.

This level of awareness is called market sophistication.

In short, it is how you’re judged against your competition.

Stage One: A new market

In a new market, you have no competition.

Imagine you’ve just created chocolate milk for the very first time. No one has heard of it.

What do you do?

Tell people what it is. It’s Milk mixed with chocolate! It tastes great. Why wouldn’t you want to try it?

mmm, chocolate mlik
mmm, chocolate milk

What to do: Tell your market what your product or service does

Example: Oculus Rift VR headsets a year or two ago

Stage Two: Arrival of competitors

Uh-oh, the dairy farmer down the street has heard you are selling tons of chocolate milk, and he wants in on the action. Now he’s selling chocolate milk too.

How do you compete? Cheaper, better, faster.

You have better chocolate milk. You use the best milk, and the purest chocolate. You’re the natural choice.

Not only do you have the best chocolate milk in town, but you deliver, and you only cost 90% of market rate.

You are the best chocolate milk in town and you have ten different reasons why.

What to do: Enlarge your claim

Example: Esurance

Stage Three: Features to support benefits

Now every dairy in town has chocolate milk, and it has really eaten into your sales. It’s time to make yourself stand out.

Not only that, but your market has been exposed to outrageous claims of “the best tasting chocolate milk,” and they are starting to tune you out. They don’t believe you anymore.

You need to emphasise features over benefits to reset the market’s expectations.

Instead of talking about results, talk about how you get results.

Instead of “our chocolate is the most delicious,” it’s “our triple infused, unique proprietary blend of chocolate and milk has been developed by MIT scientists. This technique creates the best chocolate milk that is unmatched in any part of the world.”

See the difference?

What to do: Tell your market how you get better results than your competitor’s.

Example: Lipton White Tea “baby tea leaves” ad

Stage Four: Attack the competition

Tom’s Dairy injects hormones in his cows. Your cows are all natural. Tom’s farm is overcrowded. Your cows roam free.

Happy cows make for happy chocolate milk. Don’t buy Tom’s Chocolate milk, buy your chocolate milk. Be Happy.

Destroy Tom, and let the market know that you are the clear choice in chocolate milk.

What to do: Attack your competition with feature comparisons. Stand out as the best of the best. Make your customers feel foolish and bad about buying from anyone else.

Example: The Mac vs. Pc ads, or any cell phone network commercial

Stage Five: Sell your values

Wow, your market is saturated with chocolate milk. Everyone sells it. You’ve been undercut on price. Your competitor’s match your quality, and deliver too. Tom’s sales are up despite your best efforts. What do you do?

Sell your values.

Your chocolate milk is for the rare soul who dares to be different. You believe in taking chances and individuality. You’re different than the rest.

Tom is just a corporate machine who only cares about selling more Chocolate Milk. You are a lifestyle. You represent freedom.

You are more than chocolate milk, you are a way of life.

What to do: Sell your vision and your values. The customer must incorporate you into their identity.

Example: A lot of “branding” is at this level. Coca-Cola sells sugar water that is hazardous to your health, but they align themselves with values like world peace.

So.. what stage are you in?

If Tom and the rest of the industry are selling your product in stage 3, and you’re stuck in stage one with your marketing, you’re going to be ignored.

If the market is in stage three, and you’re selling in stage five, no one is going to know what you can do for them.

The key is to be just ahead of the curve, but not by much. If the market is in stage three, but it’s getting old, try to be one step ahead in stage four.

Figure out where your market is (Hint: Talk to your customers. How deep is their understanding of your product? What messaging are they used to hearing? Are they experienced in spending money on what you have to offer?), and tailor your messaging to fit the correct stage of market sophistication.

You’ll get much better results.

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