Market Sophistication

What Does Market Sophistication Mean For You?

So, why is this important? Market sophistication is one of the most important factors in writing effective copy. Good copy speaks to the audience. Not only who the audience is, but what they know. Good copy also depends on the market and competition. Without a fundamental understanding of market sophistication, you need luck. That won’t work if you want consistent results. You have to know who your audience is, what they want, and what your competitors are doing. The levels of market sophistication can help you understand each of those.

Breakthough advertising & the true origin of market sophistication

Market Sophistication was a concept originally introduced by a Direct Response Marketing god named Eugene Schwartz, int his legendary book, Breakthough Advertising.Breakthough Advertising, an out-of-print blockbuster of a book is now sold for ungodly amounts of money, worth every penny.It's packed with strictly actionable strategy.

Groups

According to their marketing sophistication, the firms studied could be divided into three groups: Pioneers, Followers and Idlers

Pioneers

The Pioneers continuously attempted to seek out ways to meet customer needs and exploit market opportunities. They were market driv-en and proactive in making changes

Followers

Being less sophisticated, the Followers also ad-dressed customer needs but did so mostly in a responsive way. They were still mainly production/sales oriented.

Idlers

The Idlers were not willing to make changes. When the market was down, they just simply waited for it to become better without doing anything differently.

Levels of market sophistication

LEVEL 1

THE PIONEER LEVEL

The first level of market sophistication means quite simply that your product or service is completely new or innovative, and the market has not heard of an offering exactly like it. In the pioneer phase, organisations often lack competition as the result of a technological innovation that brings a completely new product to the market. An excerpt from Eugene Schwartz’ book says that in level 1, organisations must “be simple,” and “be direct.”

“Name either the need or the claim in your headline- nothing more. Dramatize the claim in your copy- make it as powerful as possible. And then bring in your product; and prove that it works.” Ideally, you’re attempting to tell as many people as possible about your new product, and how it solves problems in a completely unseen way, so you can capture as much as the market as possible before competitors – and potentially regulators – step into the equation.

LEVEL 2

OUT-DOING THE COMPETITION

In the second level of market sophistication, we move past the concept of having a one-of-a-kind product or service, and move into a more familiar arena of having a product or service with fierce competition. At this level, Schwartz says it’s imperative that organisations maintain the assertion that you’re above the competition, and prove this to your potential customers with claims about your product or service that will outdo competitors. Schwartz writes that “if you’re second, and the direct claim is still working – then copy that successful claim – but enlarge on it. Drive it to the absolute limit.”

Dan Lok writes that “at stage two, the descriptions of your product or service are longer, the market is more sophisticated, and you need to explain more than why you’re better than the competition.” You can see from these two quotes that as we move through the pillars, it’s increasingly important to assert dominance over your competitors, or “outbid” them with features and/or offerings that they’re not making to the market.

LEVEL 3

SHOWING CUSTOMERS HOW IT WORKS

In the third level of market sophistication, as you can probably guess, those in the market are increasingly aware of the claims made for your products and services, but they don’t yet understand exactly how the whole thing works. Appealing to the third level market with sales tactics from levels one and two simply won’t work, as they’ve heard it before, and they’re not going to be baited in the same way.

Essentially, the third level of market sophistication requires you to connect with buyers that are increasingly familiar with the market. This can be achieved not by explicitly selling your product, but marketing the how of your product or service. Examples of this can be the time-saving measures of a piece of accounting software “saving businesses [x amount of time],” or a new washing machine that can reduce water use while maintaining a quality clean.

LEVEL 4

THE COLD WAR

The fourth level of market sophistication, according to Schwartz, is where competitors are locked in a fierce battle to capture the hearts and minds of the buying public; calling it in the ‘arms-race’ level. In this level, your competitors are firmly on your heels, and offering a product or service that levels the competition, and as a result, there are a lot more direct comparisons and battles for each purchase. Schwartz writes that “if a competitor has just introduced a new mechanism to achieve the same claim as that performed by your product, and that a new-mechanism announcement is producing sales, then counter in this way.”

Simply elaborate or enlarge upon the successful mechanism,” he writes. “Make it easier, quicker, surer; allow it solve more of the problem; overcome old limitations; promise extra benefits. You are beginning a stage of embellishment similar to the Second Stage of Sophistication,” Schwartz says.

LEVEL 5

THE STORY-TELLING PHASE

In the fifth and final level, customers out in the market are well aware of your product, your competitors, as well as the claims and tactics that you’ve employed so far; they simply won’t work for anyone at this level of market sophistication. Therefore, Schwartz says that it’s essential to understand that “the emphasis shifts from the promise and the mechanism which accomplishes it, to identification with the prospect [themselves].”

“You are dealing here with the problem of bringing your prospect into your ad- not through desire, but through identification.” I’d like to believe that Schwartz is addressing Simon Sinek’s popular notion of understanding your organisation’s why, and marketing this to your customers. It’s important to remember that at this stage, the buying public will no longer be persuaded by big claims and fancy writing, but they can potentially buy into your organisation’s vision as a business.

LEVEL 1