Empty Markets

VOL. 0004 – FLORIDA, MONDAY, AUG 29, 2022

Juan F. Arjona Harry

President & CEO Strategee

On countless occasions we find brands whose dynamics are gradually fading in the market, some of them even finding themselves with an empty market; that is to say, a market that no longer exists, that is no longer there. It is, ultimately, a market without demand.

Empty markets present enormous challenges for those who have been participating in them with relative success, whether as leaders, challengers, followers or even as category killers. Generally, competitive rivalry had an acceleration in the final stages prior to its disappearance, bringing with it the natural erosion of margins in a convulsive market of offers, promotions, pre-packs, and another series of offers that sought until the last to be able to place units in the market.

During the terminal stage of these markets, it is not uncommon to find some brand decisions that are even unaware or do not realize that the market is experiencing its last moments and insist on robust online and offline marketing and communication processes, trying to save their market share and even getting involved in strong campaigns to attack competitors since rivalry is exacerbated in these terminal stages. But these final stages do not come overnight, and although they can be foreseen, it is common to find situations where competitors do not realize it and end up complicating themselves even more with a marketing of high competitive anxiety to achieve their results.

Empty Markets do not appear by spontaneous generation, they leave a trace to the extent that key factors of their conformation are delineated.

Markets that existed and that today typify an empty market, or markets that are in transit to "empty" whose demand is decreasing are, for example, the following:

1. Cigarette market.

2. Market of basic switched telephony.

3. Formal dress market.

4. Shoe repair market.

5. Market of fabrics directed to the final consumer.

6. Home printer market.

7. Market for sugary products

8. Home sewing machine market. 9

. Board game market.

10. Ashtrays market.

11. Among others.

Next, you can find the factors that lead to the erosion of demand in these markets, reaching the limit of setting up empty markets:

1. Changes in the way in which the need is satisfied: there is the fact that the consumer maintains a special or specific need, but satisfies it in a different way, evolving and thereby generating opportunities for new products that satisfy the need, but in a better way.

2. Changes in fashion: it happens that the sociological changes that are appearing, lead fashion towards other different styles, modifying the pattern of consumption of certain products whose consumption already begins to seem "old-fashioned"; leaving current markets empty.

3. Changes in the occasions of consumption: occurs when those occasions in which the product is consumed are disappearing or decreasing by the generality of the population, tracing a descending curve in demand.

4. Changes in consumption units: it happens, for example, in some European countries, where the number of inhabitants -consumption units- is gradually reducing, shrinking the market and its rate of demand.

5. Changes in the rate of use or consumption by occasion of consumption: occurs when the rate of use or consumption rate gradually deteriorates in consumers for various reasons, which generates an immediate reduction in demand rates.

6. Changes in technology to satisfy the need: it happens when a new technology arrives displacing the demand for products and services that were traditionally sold in the market, leaving the old technology behind [because it is expensive, inefficient, slow or ineffective].

The insistence that the market may still exist is likely to lead a company to wrong decisions in its intention to "squeeze" that market in the process of extinction, with the natural competitive friction that will always be present. The intelligent alternative lies in the permanent configuration of the innovation map of the market and of the company itself, in order to anticipate these movements that trace the dawn of new sales in emerging markets.

Processes such as vertical innovations -only up to their total coverage in breadth and depth of the portfolio- [in the same existing markets], the transit of products from industrial markets to consumer markets, cross-fertilization innovations via related categories and lateral innovations in non-existent markets, they allow the satisfaction of new demands that give sustainability and future to the commercial operations of the company.

At Strategee we contribute effectively to our clients with innovation processes, allowing them to anticipate these changes and aligning their portfolios with the trends we find in each market through our Cool Hunting studies and the orthodox supervision of their evolution.