The recent Exame report about Mapfry it took a lot of people to contact us, far exceeding our average volume of calls.
Over the past two weeks, we have created a task force to respond to all interested parties, which ended up being an intensification of “listening to the market”.
The central line of several conversations went through the concepts of how to find:
- Discovered markets
- Potential not met
or run away from their opposites:
- Saturated markets
- Irrational and cannibalized markets
These expressions refer to the view that Geomarketing only serves to identify regions with opportunities free from competition, Blue oceans, or protect yourself from situations where competition bleeds on the margins, Red oceans.
Although these use cases are real, they are also more widespread because they are easy to explain, which is why they are often covered in content created for marketing purposes.
The only problem is that they imply the notion that the growth of one company occurs only by capturing another's market, in a kind of Roba-monte.
This article explores another approach, aimed at creating value and sustainable growth.
The premise here is that the market can be expanded through innovation and value creation.
Oddly enough, many examples come exactly from the book The Blue Ocean Strategy (Kim and Mauborgne, 2004), who argue that companies can create new markets instead of competing for existing ones.
This concept showed that the market can be expanded, as long as companies explore the right levers and, for this, Geomarketing can be very useful.
Let's look at some profiles of regions starting from Mapfry Segmentation
We can see in this region the predominance of profiles
- Difficult life
- Surviving
- Simple life
- Lower middle class
Each group has specific challenges that, if well met, will expand market potential, as they are latent, partially met needs.
The three most representative groups, Hard Life, Surviving, and Simple Life, concentrate challenges related to how to meet their basic needs.
With variations, they all seek ways to supply the essentials and free up resources for what comes next, such as health, education and leisure.
Lower middle and middle class families, on the other hand, are more interested in efficient solutions such as rapid reforms, access to technologies, and culture.
Efficient business models enhance value creation well in the most sensitive gaps, where consumers already feel that they could be more efficient, whether in terms of costs, benefits, or both.
Expanding the game
Let's look at some examples of companies that innovated to expand the market, showing that growth doesn't have to come at the expense of competitors.
SmartFit
The network revolutionized the gym sector by offering a low-cost, accessible model aimed at the middle class, creating value through scalability and standardization of services.
Before the arrival of SmartFit, the gym market in Brazil was largely dominated by high-end gyms, with high tuition fees, and small neighborhood gyms.
The market seemed limited, with a perception that the number of potential customers was finite.
By uncomplicating access to gyms, the network greatly increased the base of potential students.
Netflix
With a catalog of less popular movies, they invested in original series, encouraging the habit of marathon series, a totally new consumer behavior.
American coffees
Starbucks is in crisis in Brazil while several brands are thriving.
The image of coffee cups with lids, typical of movies and series, is now part of our daily lives and the national networks are popularizing this habit.
The habit was adapted to our reality, with more affordable prices, much smaller points of sale in more convenient locations.
Condominium markets
The positioning of supermarkets has always fluctuated between extremes, popular chains focused on low prices and other sophisticated ones oriented to the shopping experience.
However, the biggest innovation came from a very simple shopping experience, with high prices and maximum convenience.
In condominium markets, consumers give up an air-conditioned environment and sophisticated offers and are willing to pay more to have the power to buy something only when the need is clear.
Value creation paths
Let's now look at some efficient business models to meet latent needs.
Circular economy
Notice the growth of second-hand goods chains, such as Grow and Lose.
Typically, younger children inherited clothes and toys from their older siblings, but at a time when having only one child is the most common, the opportunity emerges to take advantage of items that are used for a short time due to the rapid growth of children.
A new population dynamic enabling a business model typical of thrift stores.
Quality over quantity
For a long time, the industry, and the market in general, focused on volumes, encouraging people to have more options for everyday items, such as collectible color variations.
Today, the preference has shifted to high-quality items that are durable and timeless, a trend called Quiet Luxury.
Mass customization
VX Case, a Brazilian brand specialized in the manufacture of cases and accessories for cell phones, has excelled in allowing consumers to customize their own products, such as cases for smartphones and tablets, directly on its website or at kiosks scattered around malls.
This customization includes choosing colors, prints and even adding names or photos, creating a unique product for each customer. The company is able to offer a customized, scalable and profitable service, expanding the smartphone accessories market in an innovative way.
Knowing how to look at the market
The crucial factor for expanding a market's potential is the intelligent use of data.
Data analysis not only allows companies to better understand their customers, but it also offers insights into how new markets can be created.
Areas of market intelligence have excelled in adopting tools that help their companies in value creation processes, seeking paths of success that go beyond competition with competitors.
Mapfry, a Geomarketing startup, offers a set of geolocated data so that its clients can analyze profiles, identify new niches in the market and develop efficient models to meet latent needs.
You were right to create value, now what?
Entrepreneurs from all over Brazil are looking for growth levers that can expand their markets.
When someone gets it right, then comes the question of how to seize the opportunity before other competitors copy your strategy.
Growing up fast is the most important thing at this time.
For this reason, so many brands that innovate in creating value choose the Franchise model as a growth strategy.
By allowing local entrepreneurs to open chain stores, the core brand focuses on defending its differentials and supporting its network of franchisees, while accelerating expansion to different regions of Brazil and the world.
Conclusion
Market Potential need not be seen as a zero-sum game.
By focusing on creating value, using innovation and efficient business models, companies can expand the market in a way that benefits all participants.
The key lies in identifying unmet consumer needs and using data and technology to create innovative solutions.
References
- Kim, W. Chan, and Renée Mauborgne. The Blue Ocean Strategy. Campus, 2004.
- Christensen, Clayton M. The Innovation Dilemma. M. Books, 2012.
- Westerman, George, et al. Leading Digital: Transforming Technology into Business Advantage. Harvard Business Review Press, 2014.
- Innovative Business Models in Brazil: Case Studies, Sebrae.
- ABF Research (Brazilian Franchising Association), 2023.
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