We all know what a competitive market is. Various hot market examples are used to demonstrate successful use of marketing strategy – or lack thereof. What doesn’t always make headlines is talk about cold markets: markets with no active buyers. If you’re selling a product that nobody knows they need yet, you’re in a cold market. Market temperature has everything to do with the amount of competition that’s out there. An effective cold market marketing strategy is the key to win.
Are hot markets always good and cold markets always bad?
Nope. And I’ll explain why.
Hot markets are lively and intense. You can be sure to know when you’re in one because you won’t have time to pose the question. But be warned: while being in a hot market sure sounds great, that may not always be the case.
There are a few reasons a hot market can be bad. For one, the market can be too packed with competitors. Markets with fierce competition can limit your amount of profit. Secondly, if your company doesn’t have access to enough capital, you’re in trouble. You can start off as a market leader but without sufficient capital, a competitor may steal it from under you. A hot market is only as useful as your strategy is successful. You can learn more about hot market strategy in this article.
On the other hand, cold markets might not sound too enticing at first, but that doesn’t make them inherently bad. In a Kellogg-defined cold market, time is a huge benefit you have that hot markets lack. Without being overwhelmed by the intensity of a competitive market, you have time to develop. You actually have time to fail, and also time to prevent the mistakes you would otherwise make under stress. Just remember that the true failures are the mistakes you didn’t learn anything from. You aren’t at a high risk of failure if you have limited capital. Loads of capital is not necessarily a requirement in a cold market.
There are risks associated with slow growth. Once others begin to realize your market is profitable, competition may form and grow quickly. This is where capital might come in useful even in a cold market. Being able to grow quickly reduces the risk associated with competitors. By the time your competition has recognized the profitability of this market, you will already be far ahead. Every day you aren’t growing there’s a chance that somebody is going to come into your market and take over.
So how do you successfully sell a product in a cold market?
Cold market marketing strategy is all about value.
Let’s talk about value versus differentiation. Product value and product differentiation are, surprisingly, often confused by marketers. While you need a strong message of differentiation in a hot market due to the large amount of existing competition, cold markets are very different. The narrative you have to build in order to sell your product in a cold market is all about value. The question is not “why should I buy your product,” it goes back to “why do I need this product at all?” In a cold market, you need a strong value message for your cold market marketing strategy. Don’t bother calling the customer to explain to them why you think your product is great. Chances are, they’ll hang up! The narrative you need to build is about how your product is going to help them solve a problem.
The first step when you find yourself in a cold market is to find the pattern. Find the customers who bought your product and found it useful. Not the outliers, not the big brand names, not the friend-of-a-friend of an employee, but the people who bought and successfully used your product. Once you’ve understood the pattern and developed your narrative, you call the customer. This conversation should not be about you, or even your product. It should be about the customer and the problem they are facing: the problem that will be solved with your product. Navigating a cold market has everything to do with emergent strategy. How well can you adapt your strategy to the patterns you’ve discovered?
Cold Market Marketing Strategy
While you may implement a descriptive positioning strategy in a hot market, this won’t be effective in a cold market. In a market with no active buyers, narrative positioning has to be the primary strategy. You are presenting your product as a solution to a problem your potential buyer has, based on the patterns you’ve observed. Your narrative is the core of your strategy.
Stories are everything. We hear them, tell them, and write them. Stories inspire us and influence our decisions. A good narrative is one of the best ways to connect with potential buyers, to help them understand why they need your product. Cold markets don’t have to be intimidating or boring. If you can tell a good story, you can sell that product.