Market sophistication (or the stages of market sophistication) is one of Eugene Schwartz’s best brainchilds. Still, few people know about it and why it matters.
Read this article to find out what it is and why you need to be aware of your market’s stage of sophistication whenever you’re creating any type of content.
What is market sophistication and why should you care?
Market sophistication is the level of knowledge your market has on any given topic. As Eugene Schwartz put it:
“How many similar products have they [your market] been told about before?”
The more they know (or the more they’ve been exposed to the same type of information) the less they want to hear about it:
- You wouldn’t explain the benefits of a smartphone to a digital native
- You wouldn’t tell the same joke to people who already heard it
- You wouldn’t promote your business course to millennials with the ‘work remote from Bali’ hook
- You wouldn’t explain the benefits of a sharp knife to Gordon Ramsey
In the podcast I also mention some products and niches where this is apparent.
The concept of market sophistication was popularized by popular marketer Eugene Schwartz, in his book Breakthrough Advertising. The superstar of the book (the 5 stages of awareness) got all the press though.
So that’s what market sophistication is. But why should you care?
Because it is not enough to simply create a good product and put it in front of the target audience. Nowadays, with attention being the new oil, your ads need to stand out from the crowd. To stand out, your ad and its product need to seem NEW. The novelty factor needs to be high. Remember these always-present objections in the minds of your prospects:
“How’s this different from everything else I’ve seen?”
“Why should I care?”
“Why would I not postpone action (aka not do anything and forget all about it?)”
If your ad and product don’t seem NEW, they’ll be ignored faster than the resident rush hour subway station hobo.
In other words, if you don’t consider the stage of market sophistication of your audience, you risk not hooking them in with your ads in the first place.
The 5 stages of market sophistication (as explained by Schwartz)
The following is a short summary of pages 37-50 from Schwartz’s Breakthrough Advertising, a book released about 50 years ago, widely considered every direct-response copywriter’s Bible.
1. Completely untapped market, completely unsophisticated audience
Every marketer’s sweet, sweet dream. Your the first one to market to this audience. They’ve never heard about your product or your claims before.
The biggest mistake here is for the marketer to get in their own way — using too witty, too complex, or too indirect messaging.
Instead, be simple and direct.
What does your product do? What benefits does it give your target customers? Dramatize your claims and give proof.
2. New competitors enter the market, slightly sophisticated audience
The direct claim still works, but as you’re not alone anymore, you need to drive that claim to its absolute limit.
For every new competitor however, the claims and promises will increase, until…
3. Your marketing claims feel old to your sophisticated audience
They’ve heard it all before.
“Yeah right”, they say while actively looking for a reason to leave you and your now-old ad behind.
As Schwartz points out, many markets have a constant mass desire. Think weight loss, electronic devices, cars, make-up, perfume…
As such, there will always be buyers for products in these markets. But they won’t be persuaded by the steps mentioned in stages 1 and 2.
This is where the “new mechanism” comes in. A “new” way of getting to whatever benefits your product offers. Think of industries that haven’t had many actual innovations in recent times. Toothpaste and toothbrushes for one.
Here the emphasis shifts from WHAT a product does to HOW it does it.
Because the buyers already know what the product does anyway (Sidenote, always meet your prospects where they’re at. A bored prospect doesn’t buy.)
4. The new mechanism is enlarged upon
Much like in stage 2 where the claim is driven to its absolute limit, now the same is done to the “new mechanism” (that is starting to grow old and weary).
Elaborate on the new mechanism. Make it faster, easier, surer. Make it solve more of the original problem, make it promise extra benefits.
This will go on until…
5. The now sophisticated audience no longer believes or wants to hear your claims
Your audience now does not want to hear about what your product does, how it does what it does nor about what it can do for them.
They’ve heard it all before and have now thrown you and your ads in the trash.
Competitors are leaving for the next gold rush and only the most thick-skinned businesses remain.
This is where indirect ads and promos are needed the most. Because direct ads are direct failures in this stage.
But luckily, this isn’t a death sentence. More like a temporary, but powerful, smack on the head.
Schwartz recommends ads that focusing on identification, and gives the following classic identification-based ad as an example:
3 Examples of Market Sophistication (to really hit this point home)
The evolution of the smartphone
Remember how big of a splash Steve Jobs made when he revealed the first iPhone back in 2007? Remember how it was marketed in stores all over the globe?
Compare the marketing to how it’s done nowadays.
Back when nobody really knew what a ‘smartphone’ was, all you had to trigger the novelty factor was to proudly promote that you were, in fact, selling these new things called smartphones.
Nowadays (we call them phones now) any marketing promo that relies on ‘smartphones’ as the attention grabber is… well, a dud.
Here’s what a CRM does: it helps you structure, organize and utilize all information you have on your customers and prospects. Nowadays some CRMs go way deeper than that and are incorporated into a 360° marketing platform — but broadly speaking they all do the same thing.
And that’s why underestanding the stages of market sophistication is important. Remember that your ad needs to create a sense of freshness — it has to feel new.
Direct-response legend Gary Halbert once said that prospects sort their mail over the trash bin. If your ad doesn’t convey a sense of “new” it’ll fly in the trash (literally and figuratively.)
What this means for CRM marketing, is that the sense of freshness will seldom come from a feature in the product — everybody knows the features, as a result no one cares.
If the product won’t create the new-factor itself, it’s up to marketing to do it. In other words, the hook or big idea in your ad needs to be new and indirect. Because if it were direct it wouldn’t be new.
I’m writing this piece in early February 2023. ChatGPT has been out in beta for a while now and every social media platform is inundated with posts about it.
Any product released right now doesn’t need to come up with indirect messaging because ChatGPT (or, the technology behind it) is new and fresh itself. As such, direct ads work (for the moment) because the market is in an early stage of sophistication.
Hope this helped
Like anything in copywriting and marketing, knowing and understanding the stages of market sophistication isn’t a magic bullet.
You’ll still have to make mistakes and create average promotions, until one beautiful day, you don’t.
But if you internalize the stages of market sophistication, that beautiful day will come sooner rather than later.
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