How high is that wall? Identifying market maturity by the size of the supporting service industry.

I’m working on putting together a sales and activation solution for a client who wants to sell into the supermarket channel. While looking through the mountains of information on the internet, talking with people in the business, and researching what others have done, I had the thought that the number of support companies in a market might be an indicator of the market’s maturity.

At the bottom of the product/market maturity curve, the offer is limited, the customers are excited, and the buyers and merchandisers are trying to keep things organized. The market is still new, and there is room for everyone.

As the market matures, the offer increases because everyone smells the opportunity, the customers start to have a much wider choice, and the merchandiser becomes a gate keeper.

A little farther up the curve, the suppliers are starting to bump shoulders, the customers have a wider range of products, but have started to have preferred brand, and the merchandiser has started to choose who will stock based on relationships, support, and money.

It’s the point between the second and the third that the supporters of the products start to flurish. With an ever wider offer, the idea of screaming louder than the rest becomes a requirement, and the suppliers start looking for a way to differentiate themselves from the others. They’ll start with improved packaging (cost increase due to new materials, new designs, and new flavors), but that will pass quickly. They will all start that, and then the next question becomes: “What else can we do”. That is the point that the growth in marketing companies and agents and brokers takes off, and their curve starts to go more vertical. More money then will start being placed into the activation and support of the products and the brand. Supply and demand will dictate the fees necessary, and the barriers to entry will grow. I found an interesting pdf from PWC that demonstrates, on page 3, how the opportunities for service industries grows with the maturity of the market. See it here.

Going back to the idea of identifying market maturity, it’s between the second and third point that the support for the market grows, as evidenced by a large selection of brokers, agents, and sales force companies, and it is this surging of support that we can discover how mature the market is, and the potential percentage of budget that has to be assigned to market-entry, twoit, possibly too much to make it worth the results.

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