How to Differentiate in a Mature Market
Driving growth in mature markets is hard.
By definition, a market is “mature” when most of the customers’ needs are well-satisfied.
The reason it’s so hard to differentiate, innovate and gain market share is because there are very few unsatisfied needs left to exploit. This situation tends to commoditize offerings and erode margins because customers see all providers as “doing a pretty good job.”
So, how can a business differentiate, innovate and grow in a mature market? Answer: by redefining your market.
Getting tasks done
People buy products and services to get functional and emotional tasks done. They don’t really care about your product or mine; they just want to get their tasks done. We purchase printers to print material, we hire Uber to get a lift from one place to another, and we hire financial advisors to help us plan for retirement.
So rather than defining your market according to the product or service you sell, redefine it as “the group of people who have a common task they want to get done with your offering.” Then identify the primary task they want to get done with your offering and make sure you do everything you can to empower them to get it done perfectly.
For example, if you’re a residential real estate agent, you might tell people that you are in the “residential real estate market” because that’s what you sell. Or you might say that you “help people buy and sell residential homes,” because those are the tasks customers are trying to accomplish with your help.
This is a much better way to define a market because it enables us to understand our customers’ needs, and because it enables us to identify other related tasks that customers are trying to accomplish when using our offering.
Think of a “related market” as “a related task your customers are trying to accomplish in the same circumstance when they hire you.”
Redefining your market
Consider The Kathy Chiero Group of real estate agents in Columbus, Ohio. Back in 2012, Kathy realized a lot of people were downsizing. Not only that, she saw that they have significant needs beyond just selling and buying a residence. In reality, they want to navigate a complicated life transition that is fraught with legal, medical, emotional, and financial challenges as well.
Seeing an opportunity to differentiate her company by addressing these related tasks, Kathy decided to hold a free two-hour seminar called “Downsize Columbus” where people could learn about all aspects of downsizing. To support her, she invited area experts in the legal, medical, mental health, and financial aspects of downsizing to join her, for a fee, to present and answer questions.
No one had ever done this before, so she wasn’t sure anyone would show up; more than 200 people did. She held two more events that year in a larger facility, and they sold out, too. People were hungry for expert advice that enabled them to navigate this complicated life transition.
It soon became evident, however, that a two-hour overview wasn’t enough. People needed more time to take a deep dive into each of the five key areas — legal, medical, emotional, financial and residential. So Kathy started hosting “Transition Tuesdays” following each Downsize Columbus event.
Each Transition Tuesday focuses on one of the five key areas. Kathy is there at all six events, helping, encouraging, and shepherding people through the learning process. At the end of the six events, she is in a great position to be their real estate agent.
Instead of slugging it out with other real estate agents on the same competitive dimension of “excellent service,” The Kathy Chiero Group (six people) has differentiated itself by addressing related tasks that customers consider important and unsatisfied as well.
The group continues to serve all kinds of residential buyers and sellers, but since hosting Downsize Columbus — 13 such events to date — dollar volume has increased by 20 percent from 2013 to 2015 and units sold has increased 10 percent each year. Kathy is a member of the $25 Million Dollar Club and has annual sales of $10 million or more.
This would be a great story if it ended there. But perhaps even more interesting is that now, having established a successful business model with Downsize Columbus, Kathy has obtained the domains for “DownsizeSanFrancisco.com,” “DownsizeAtlanta.com,” — 120 US metro markets in total.
She has hired a consultant, manager, and team to take these events nationwide. Her new company helps real estate agents and professionals in other cities generate leads and educate the public, all while she gets a cut of the action as passive income. Not bad.
Are there other related tasks that your target customers are trying to get done when they hire you? Tasks that they consider important and unsatisfied? If so, maybe you have an opportunity to differentiate, innovate and drive growth, too. Or create a new business.
(A version of this article first appeared in The Business Journals, September 22, 2016.)
Drive Growth By Redefining Your Market
Prev post
