How to identify a mature market
Mature markets are easier to spot than immature ones. Once a market is established, there is a flurry of new entrants, sales and marketing spending, and product development as competitors race to the top.
Eventually, “feature parity” becomes the norm for the market as lagging entrants catch up to the first mover. As this continues, market incumbents spend more and more on their go-to-market strategies, hoping to set up “moats” that will keep new entrants from disrupting their business models. This results in very crowded markets.
Below are a few conditions to look for when determining if your market is mature:
- There are many companies whose solutions and capabilities overlap that are vying for the same market share.
- Industry Analyst firms such as Capterra or G2 Crowd have an established “category” for your industry that ranks players on multiple criteria for prospects.
- Your prospects are in the early majority and late majority. They are more risk-averse and want to see proof points and confirm ROI before they purchase.
- Your solution has reached product-market fit. People are paying, staying, and referring others to your service.
- Investment rounds in your category are much larger. You see private equity investments, Series C rounds, and consolidation through mergers and acquisitions in the market.
- You find yourself having to give discounts to close deals because competitors' functionality and positioning are so similar to yours.
Opportunities in a mature market
As crowded as established markets are, the right ones can be ripe for disruption. Suppose you can successfully enter a mature market and build your solution around an unmet customer need. In that case, you can rapidly steal market share from incumbents and set a new standard for the industry.
Because mature markets are already solidified, the GTM testing has already been done for you, and you’ll have a better idea of who to target with which marketing tactics to grow your company. If you can create the right foothold for your company, you’ll be able to capture pent-up market demand and kick your company’s growth into high gear.
Here are a few factors that make mature markets appealing for entry and growth.
- There are clear blueprints of what works and what doesn’t in the market. The leaders have figured it out, and the laggards haven’t been able to crack it yet. Therefore you have great examples for your team to emulate for quick growth.
- Prospects are problem-aware and solution-aware. This means that you can use industry terms and they will instantly know what you’re talking about, why it applies to them, and how it can help them, allowing you to build messaging and execute effective campaigns much faster.
- There are clear benchmarks for success that are defined at every company level. You can thus very quickly judge the effectiveness of your GTM strategy and execution and easily compare yourself to the competition.
- There are often over or under-served segments of the market that can be carved out to minimize competition and maximize differentiation.
Challenges in a mature market
The biggest issue with mature markets is how competitive they are. As a result, coming in with a standard position and GTM strategy will be a recipe for slow, frustrating growth because you’ll easily be lost in the noise created by your competitors. As feature parity increases, positioning and messaging become more and more similar, which makes it increasingly difficult to stand out.
Many companies that are lured into mature markets enter without fully understanding the product requirements for success or without understanding what their customers want. In doing so, they fight hard to reach the middle of the pack but cannot rise to the top, resulting in increased spending with diminishing returns and slow growth.
Here are a few specific issues you may have when executing a GTM strategy for a mature market:
- It can be difficult to convince prospects that you’re better than incumbents who have more resources, brand presence, credibility, and a more developed product than you.
- It is very easy to get lost in the noise with so many competitors shouting so many similar messages.
- Paid media ad channels can become expensive as many companies with large marketing budgets drive up ad costs.
- Companies in established markets often have already occupied the main segments of a market, making it difficult to uniquely position your company or serve the market without stiff competition.
- As a new entrant, incumbents' products have a head start on yours (sometimes decades-long). As a result, customers often have a high bar for performance and will be less willing to put up with bugs or product inefficiencies.
- As an incumbent, it is easy to become stagnant in your product development, positioning, and messaging, which can leave you open for disruption by a savvy new entrant.
How to create a go-to-market strategy for a mature market - “Niche down and carve out”
Because mature markets are often so competitive, if you’re using the same GTM tactics as everyone else, you’ll be setting your company up for failure. Gaining market share quickly becomes a zero-sum game. And it’s really easy to get lost in the market's noise, particularly as products become more similar.
If you want to avoid the fate of so many competitors, you’ll need to be bold and shake the market up. Take a unique position and stand out from the crowd. You’ll also need to focus on a small portion of the market and make it your company’s mission to serve that segment better than anyone else.
This requires laser focus and discipline. you'll need to say “no” to strategies that may be viable in the short term to achieve your long-term vision.
If you’re able to find the right market segment and properly differentiate yourself, you’ll be able to grow quickly while leaving frustrated competitors in the dust. Your target customer base is also most likely product-aware and solution aware, which will minimize your sales cycles and let you get more revenue in the door faster. Finally, you’ll be able to create a beachhead that you can use to enter the market with minimal competition.
From there, you can expand to other, similar industries with a differentiated product and position, allowing you to increasingly gain momentum and market share, taking on (and beating) incumbent companies, even as a new entrant.
In many cases, you'll find success doing things associated with the "Market shakers" group on the chart below.
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