The Maturation of an IndustryIndustries, like people, have life cycles. New ones begin, they mature, and some, like horse drawn carriages, the telegraph and film for cameras, even die. When an industry is early on in its life cycle, there are similar dynamics that you may recognize.
1) Providers rush in – A young industry is a growing industry, so people rush in to make their millions.
2) Consumers can’t evaluate quality – In a new industry, no one has experience using the product/service. Therefore, they can’t know whether the product/service is a quality one. Even after they’ve used it, they may not know if it was quality.
3) Consumers can’t evaluate cost – Since consumers have never bought the product/service, they don’t know what a fair price is. Sometimes the vendor doesn’t know.
These dynamics were apparent in the early days of the discount retail sector. Discount retailers popped up everywhere, cutting out the middle men by buying directly from manufacturers and lowering their overhead by buying large volumes and selling them in large, less elaborately adorned stores. They were able to offer more variety at a lower cost than what most consumers had traditionally had access to.
But consumers still didn’t know if the goods they were purchasing from their new hometown discounter were quality or whether they were priced fairly. They were cheaper and better than what they could get from the dry goods store down the road but that was about all they knew, or cared about…at least at first.
But over time, the industry began to mature. Consumers became wiser and more adept at evaluating quality and price. And in the end, the discount retailers who initially succeeded due only to their customers’ lack of knowledge and experience were eventually overwhelmed by the retailers who could actually offer variety, selection and service at a fair price (also known as value) to the customer…retailers like Wal-Mart, K-Mart and Target.
These same dynamics are now playing out in the world of web design and internet marketing. Everybody has a neighbor that builds websites and most of those folks claim to be experts at search engine optimization. For the last decade, people have had no idea what to pay for a website and even less idea of what actually constitutes a successful internet strategy. If you talk to 10 web companies, the spectrum of quality, service and price you will see might blow your mind.
But things are changing. Many, if not most, consumers have been burned by at least one “web guy.” Either the website never was finished, you got overcharged or both. Consumers are becoming wiser and more adept at evaluating quality and price. And in the end, the web companies who succeeded at first due only to their customers’ lack of knowledge and experience will eventually be overwhelmed by the providers who can consistently offer true quality, service and expertise at a fair price…also known as value. For more information contact us.
By Kris Nordholz