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How to Refine a Market Analysis Using Market Maturity Phases (2 of 3 in a series)


Overview: This blog post content is part of recent document that is available on my website. For the full document, go to my website on the Tools and Techniques page: Market Analysis Framework

Technology markets go through a pattern of emergence, growth, consolidation and maturity. Each phase creates unique marketing challenges. Marketing and product management teams should use the market maturity phase model to analyze market attractiveness and develop product strategies.

This is the second document in a three-part series. The first document, "How to Structure a Market Analysis" provides a multi-step process for analyzing market attractiveness. The third report, “Leverage Market Maturity Phases in Go-to-Market Strategies,” aligns marketing tactics and programs according to changing maturity phases. This document provides additional levels of detail regarding the use of market maturity phases for determining market attractiveness.

Technology markets move through a series of defined phases. Some markets move very quickly through the phases, and other markets may take significantly longer or become entrenched for an extended period of time in a specific phase. Years of market research show that these market phases are highly predictable. However, the events that occur in each phase vary with changing economies, buyer priorities and emerging technology developments. Be cognizant of what phase a market segment is in and tailor analyses of market attractiveness and product and service offering plans accordingly.

A market analysis framework is developed which is organized by market, product, competition and customer issues. The framework provides the foundation for a market segmentation analysis and includes a comprehensive listing of analysis factors, but not an exhaustive list. The factors have been designed to minimize criteria overlap and capture the most relevant data and can be characterized or quantified with a scoring model to determine market attractiveness.

This document expands on the basic market analysis framework by explaining the unique characteristics that occur depending on the maturity phase the market is in, from embryonic to declining. Market phase impacts market attractiveness, product planning and marketing execution.

The challenge for marketing is to go beyond a "vanilla" market segmentation analysis and tailor the information in its analysis to support planning for and deploy offerings to gain market or mindshare. From a planning standpoint, a more robust segmentation analysis allows a provider to understand what the impact may be on its business model, for example the need to use different routes to market or invest in acquisitions for required capabilities. From an execution standpoint, deeper analysis helps identify needs such as investing in more education in early-stage technology markets or doing more detailed customer segmentation to narrow down early adopter profiles.

The implications are profound. Providers that do a better job of market analysis are more likely to successfully enter new markets and reject markets where they could not meet market share or profitability goals. Even in engineering-driven companies that focus on products first and marketing last, market analysis provides benefits for product development and launch success.

The audience for this document is the marketing and product management staff responsible for product and service development and deployment.

What you call a market phase is not truly important — the key is that for each phase unique characteristics and requirements exist. Markets are dynamic, and market-attractiveness and product plans for one phase are not necessarily the same for subsequent phases.

For each market phase, there are a set of analysis characteristics. The characteristics shown in each market phase are provided as examples as in the following table:

You may find other characteristics that you want to use and other decision criteria to implement. Develop an analysis framework that your company can implement and support for market planning, and product and service deployment.

Markets go through a fairly consistent pattern of emergence, growth, consolidation, maturity and decline, as shown in the following picture.

How quickly a technology goes through these phases will vary, with some requiring 10 or more years to reach maturity. Disruptive technologies, such as the Internet in the 1990s, and social software, software-as-a-service (SaaS) and cloud-based services, in the 2000s, can blitz through from embryonic to high growth at a far more-rapid rate than typically experienced for other enterprise software product life cycles.

Each market phase poses distinct questions that providers and buyers must answer to make a good buying decision. For example, provider viability is most important during the consolidation phase, whereas in the emergence phase, companies need tutoring on the practical applications of the new technology.

Also, as a market moves into the maturity and decline phases, there is the potential for market disruption because of new technologies, standards or new entrants to the market that can shake up the status quo.

In a software market, as technologies and markets mature, a broadening and overlap of functionality occurs that was once delivered as a point offering. Providers can develop a "platform" that includes multiple functions. However, opportunities will still exist for best-of-breed offerings as new niches develop and another cycle begins. A more component- and service-based scenario gives best-of-breed providers a way to add value and thrive within larger vendors' ecosystems. Although suites might dominate a market, there will always be room for innovation and creativity, opening the opportunity for another cycle of emerging markets with best-of-breed and niche offerings.

Best Practices

A key outcome of a market analysis is to determine market attractiveness or lack thereof. Realize that the attractiveness will vary based on current and future internal and external factors. When conducting a market analysis, the following best practices help refine the data collection and analysis process. Make sure to take these factors into account during your analysis:

  • Technology markets move through a series of defined phases, each with its own set of analysis characteristics

  • Each phase has its own distinctive marketing and product planning requirements and competitive and customer needs

  • Technology and market convergence is common over an extended time period.

Key best practices to use market maturity phases in a market analysis are:

  • Step 1: Conduct an initial market segmentation analysis

  • Step 2: Refine the analysis to determine market maturity phase and associated unique characteristics

  • Step 3: Conduct more-detailed market analysis using maturity phase-specific factors to identify and address the product and marketing requirements.

Please contact me if you have any questions or comments: thomasgeid@comcast.net

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