Why markets are oversaturated and how to escape the trap

Executive overview

Too many businesses are chasing too few customer needs. Three forces — globalisation, the internet, and near-zero barriers to execution — have compressed market maturation to the point where new niches are often worthless before they're even filled.

The standard responses (be better, niche down) accelerate commoditisation rather than escaping it. The only durable exit is creating demand that didn't previously exist, not finding or answering demand that does.

The new definition of business strategy is not finding needs or answering needs — it is creating them.

Why markets are overcrowded

• Every market reaches a point where supply of solutions exceeds the number of meaningful customer needs.
• Globalisation means a winning offer in one market replicates globally within 18 months, flooding local markets with new entrants.
• The internet reduces distribution friction and enables platform consolidation — incumbents collapse entire adjacent industries, shrinking available space further.
• Near-zero barriers to execution mean quirky, marginal niches get filled instantly; formerly viable gaps no longer persist long enough to build on.
• The result: the second a customer problem emerges, ten companies appear to solve it.

Why "be better" and "niche down" both fail

• "Be better" is a commoditisation strategy — it signals sameness while asking customers to take your word for marginal superiority.
• The market does not reward better; it only rewards different — unless the margin is so large it constitutes genuine differentiation.
• Niching down is a response to overcrowding, not a solution to it; it was always desperate gap-hunting in a ravaged landscape.
• Niches narrow until the total addressable market is too small to sustain a business.
• Both paths accelerate a race to the bottom within the existing pool of known customer needs.

The alternative: creating unknown needs

• Unknown needs are those customers don't yet have because no business has shown them a new possibility.
• They cannot be found through data, trends, or customer interviews — they don't exist until a company creates them.
• Demand creation works by shifting context: placing a product in a new frame where it generates entirely new value.
• This is not radical innovation evangelism — it is a pragmatic response to a structural economic shift.

How demand creation works in practice

• Moju (juice shots): Ginger shots existed but had no audience. Moving them from the juice category into daily health and vitamins — alongside products like Berocca — created a new natural-fresh segment. The company has since grown roughly 40x.
• Substack: Online writing was mature and functional. Substack created a new relationship between writers and readers — owned audiences monetised via email — that nobody had conceptualised or requested. Latent demand activated immediately once the possibility was visible.
• Oatley: Oat milk had existed since the 1990s with negligible demand. Repositioning it as a sustainable lifestyle signal and building distribution through specialty coffee shops created a category. Turnover moved from ~£30m to ~£2bn.
• In each case: overcrowded market, no analytical reason to launch, no gap visible in the data — yet each blew the category apart.

Four thinking approaches that enable demand creation

1. Cross-category connection — pulling ideas from outside the industry and placing the product into a new contextual space where it gains leverage it couldn't have in its original frame.
2. Personal and idiosyncratic taste — founders in each case were driven partly by what they personally valued, not only by what the data said. Unique life experience produces impossible-to-copy strategic starting points.
3. Category norm rejection — actively contradicting established rules of the category turns competitor strengths into weaknesses. Incumbents cannot copy the move without undermining their own positioning.
4. Tolerance for arguable ideas — every one of these strategies was easy to argue against before it worked. Courage to push through contestable ideas is a marker of genuine strategy; universal agreement signals only common sense.