Market Types

“Rule No.7: Agree on Market Type. It Changes Everything.” (The Startup Owners Manual)

The Startup Owners Manual: The Step-by-Step Guide For Building A Great Company by Bob Dorf and Steve Blank is an insightful book below is a summary of Rule No.7.

Product/Market relationships:

  • Bringing a new product into an existing market
  • Bringing a new product into a new market
  • Resegmenting a market as a:
    • Low-cost entrant
    • Niche entrant
  • Cloning a business model that’s successful in another country

Questions for existing markets:

Does your product or service improve on a customer-defined attribute (faster, cheaper, better e.t.c.)?

How do the features of your product or service compare with competitors?

Questions for new markets:

Does a large enough customer base exist, and can they be persuaded to buy the new product or service?

* Don’t spend on sales and marketing funds yet.

Questions for resegmenting an existing market:

Low-cost re-segmentation

Are there customers at the low end of an existing market who will buy “good enough” performance at a sustainability lower price?

Niche re-segmentation

Would a segment of an existing market buy a new product designed to address more specific needs?

* Check out Blue Ocean Strategy by Renée Mauborgne and W. Chan Kim for more information on re-segmentation.

Questions for cloning an existing business model:

Has an existing business been proven in location A but not yet adopted in location B, that has a large local market, due to its unique domestic setting (language, culture e.t.c.)?

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