Since I wrote this original article, over 2 years ago, about thick vs thin markets, the dating site market has taken this lesson to heart. Back in the summer of 2015, FarmersOnly.com was principally the only dating site going after a thin market. The rest were focused on the thick market and touting the size of their audience.
Since then, dating sites like BlackPeopleMeetup, SingleParent, Silver Singles and OurTime, each who chose to focus on a small slice of the overall dating market, are coming on strong and displacing some of the old-time dating sites like eHarmony.
The text in the original post below has stood the test of time and is more relevant today than when it was written.
When it comes to justifying a startup, many business plans tout the size of the overall market, claiming they can capture a share of it with their product or service.
What is a Thick Market
When the market is large with little product differentiation, we call that a thick market. Dry cleaners operate in a thick market.
For many years all the major TV networks operated in a thick market. They all had news at 6:00 and 10:00 and sitcoms during prime-time. Some shows might have been 30-minute episodes and others 1-hour but they were all targeted at the mass market. The problem was that while each program had a reasonably large number of viewers, they were not well differentiated and viewers were not that loyal.
What is a Thin Market
When the market is thin with a high degree of product differentiation, we call that a thin market.
Recently I saw an ad for the online dating service called Farmersonly.com that segments the online dating service to a specific slice of the dating market. While a thick market dating site like eHarmony might expose you to lots of potentials, but poorly matched dates, a thin market dating site like Farmersonly will give you fewer, but more relevant potential dates.
While all the major networks were operating in a thick market, cable stations like HBO began to offer shows like the Sopranos or Deadwood, that appealed to only a small slice of the TV viewers. While the viewership of these shows was more concentrated, the fans were far more loyal and would never miss an episode.
In thick markets, you have a lot of competition and limited differentiation. In contrast in thin markets, you have limited or no competition based on your product or service differentiation. Therefore, your approach to marketing is different depending upon if you operate in a thick or thin market.
How to Market in Thick Market
In thick markets, it is often about name recognition and benefits from brand marketing to raise the level of your brand’s name in the consumer’s consciousness that makes a positive association with your product or service.
The major networks were competing with each other and prioritized the number of viewers over their quality. The problem with marketing in thick markets is that the buyers have the power. For the networks, the buyers were the companies wanting to buy commercials. The prices the networks could charge advertisers was elastic, If the price of a commercial spot went up the advertisers simply went to another network. It was all about cost per eyeball with little differentiation.
In thin markets, it is more about making the prospective customer know your product or service exists as a solution. With thin markets, prospects often require an education to help them refine their problem statement.
As an invisible fencing dealer, we operated in a thin market. The problem was that prospects really did not know that our offering existed. We did not what to be thought of as a type of fencing in the same ways as cedar fencing or cyclone fencing that provided security and privacy. We address only a small segment of the demand for fencing, specifically focused on keeping the customer’s dogs in the yard.
In the TV show example, while the networks were focusing on their networks brand, Cable companies focused their marketing on the individual shows. In thin markets, the supplier has the power. For the cable companies, the buyers were the people paying for access to their shows. Prices were inelastic because fans were so loyal they absorbed price changes if it meant being able to watch the TV show they loved. It was all about creating loyalty and less about the number of viewers.
Do you operate in a thick or thin market and are your marketing efforts properly aligned?
