Our guide to competing in stagnant markets
Growth, demand and profitability all appear to have stalled. What’s more, your analysis reveals that these trends are impacting your industry as a whole; in other words, it’s an issue linked to external drivers rather than anything organisation-specific.
This is a classic market stagnation scenario. And given that every market has its own lifecycle, it’s a fact of life that you will be faced with it at some point.
But while specific market stagnation is inevitable; terminal damage to your business is not. To respond, re-pivot and to regain a valuable competitive edge, here are some suggested courses of action…
Segmentation
The bottom-line sales figures for a particular product may indicate slow or non-existent growth. However, the true situation could be more nuanced. While demand among certain groups of customers may indeed be in decline (dragging down the headline figures), the same may not be true of everyone. In fact, in some areas, there may be untapped market potential that’s ripe for exploitation.
To get the full picture, consider carrying out a segmentation exercise: i.e. dividing your wider target market into groups that share distinct characteristics, needs and behaviours.
Are there particular groups that continue to offer growth potential? For instance, while so far your consumer tech offering has been aimed mostly at millennials, does an unmet need among older groups still exist? By default, your B2B product has been targeted at enterprise, but this market appears to be reaching saturation. Is there still a demand among early and growth stage companies, as well as specific industry sectors? Is performance better via some channels than others?
In this way, segmentation can help to highlight valuable opportunities, even in highly mature markets.
Up-to-date market research
The drivers of demand shift constantly. Tastes and preferences move on. A particular product may become less desirable as innovation brings substitute solutions to the marketplace. Social changes may occur (e.g. the rejection of throwaway consumables for greener alternatives). It may simply be the case that customers are tired of approaching a problem in a particular way and are looking for something new.
Against this changing landscape, remember that market research is not a one-off event. Especially when faced with declining demand, it is vital to collate and interrogate market data; to challenge your assumptions and to ensure that your value proposition remains relevant.
Identify the cash cows
Segmentation allows you to distinguish between profitable and non-profitable market sectors. In a similar way, you should drill into your product or service range to distinguish between winners and losers.
It may be, for instance, that while sales for your most advanced offerings were initially strong, the numbers have dropped off considerably. Meanwhile, performance of your basic range has held up well. It could be an indication that this latter category is continuing to meet a fundamental need, while customers have lost interest in gimmicky extras.
Again, research is needed. Find out why customers continue to be drawn to a particular product and focus your efforts in promoting it. At the same time, consider ditching poor-performing offerings. This approach can lead to much more targeted and effective use of resources.
Refresh and rebrand
On average, drivers cover 20% fewer miles than a couple of decades ago. And of course, most of us have been behind the wheel a lot less over the last year or so. In response to this, RAC has just launched a pioneering ‘no ties’ pay-by-mile insurance product.
It’s a reminder that even in the most mature, saturated markets there is still often scope to generate new ideas to respond to shifting needs. New problems still require new solutions. It may be a case of tweaking your product range or developing a new offering to take into account altered need states. It could be a matter of rebranding to appeal to an as-yet underserved demographic or market niche. Or it could be a combination of the two.
To help identify your best response to a sluggish market, speak to White Space Strategy today.