Three Stages of Xeno Market Sophistication

market sophistication demonstrated by city popping out of book

Xeno market sophistication always needs to be considered when you entering a new market. If you do not know what stage your market is in, then it can cost you a lot of heart-ache and rands down the road. If you a product developer, a startup or launching a new business, always consider the level at which the market currently is at and make sure you message matches that of the market..

Stage 1: First to market

When the market is new and you solving a real problem that no one is catering for, much  like we did over 40 000 years ago, with the invention of the shoe. You did not need to sell anyone on the concept of the shoe. They would pay whatever they could for a pair once they realized your product is the only product that solves their problem. A foot injury back then can put you at the bottom of the food chain and it was considered a fatal injury to have. At this stage there are many people who may not know that even the concept of shoes exist, or that their is a solution to the problems associated with shoelessness. They may not be aware that being barefoot in nature is a problem. This is closely tied to the respective prospect awareness stage. (discussed in the next section). The best part about this stage is that you have no competition. All you need to do is educate the market. An example of a product like this in today's world would be found in innovative fields like nano-technology, artificial intelligence and the hidden scientific challenges of soil.

Stage 2: The rise of competition

The next stage of Xeno market sophistication the shoe market is when other people in the marketplace learn how you make your shoes and they start selling pairs of shoes as well. At this early stage bold claims usually work. A bold claim would be claiming that you the best, the first, the most comfortable, the most affordable, the most durable, the most established and the most reliable. In this stage there is some competition but the market is not saturated yet. People just need a reason as to why to buy from you compared to the others in the market. The market is still new and not sophisticated and hence bold claims work well. Your prospects have very poor “b.s detectors”.The nice thing about this market is that customers are aware that they have a problem and that solutions does exist. This means you do not have to educate the prospect as intensely about the utility and benefit of the product like you would have to do in stage 1. You do not have to create an entire new market, you can merely help a market grow.

Stage 3: The era  of differentiation

The third stage of Xeno market sophisitication buyers become more sophisticated, the market becomes more populated with competition and the impact of bold claims no longer work. People develop a more sophisticated “b.s detector”. This is where you need to differentiate, develop a strong unique selling point and make sure you communicate your value proposition effectively to your target audience. If you do not differentiate from your competition then not only do you not stand out you will not be growing the market, you will need to cannibalize the market to survive. It’s much harder to start a business cannibalizing the market compared to growing an existing market.

At stage 3 the shoe industry will start breaking up into niches like running shoes for women aged between 45-55. It will literally become that granular. You can no longer sell yourself as the best in the industry, but you can sell yourself as the best shoe for the prospect based on the niche you focus on. People at this stage want more than just the basic benefits of shoes, the basic benefits becomes the market prerequisite. They now want shoes tailor made for their lifestyle. In this phase less hype works because people have been desensitized to all of the “b.s”.

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