Market Type

Steve Blank model for Customer Development.

types

• Existing Market: Sustaining Innovation, keeping going higher-end
  • customers needing highest performance? scalable business? defensible? barriers to entry?
• Resegmented Market: 2 variations: cheaper = low-end; niche-driven
  • low-end model: customers who would downgrade what they buy if it were cheaper? is that profitable? barriers to competition?
  • niche model: are there non-buying target customers who would buy if product were more targeted to their needs? at the same price? defensible?
• New Market: Disruptive Innovation: produst is so much cheaper it creates new class of customer
  • is there large market who "couldn't do this before" (cost, skill, availability)?
• Hybrid
  • New Market combined with Low End Resegmentation: Southwest Airlines, Dell Computer, Cell Phone

A Start Up in a New Market (enabling customers to do something they never could before,) might be unprofitable for 5 or more years, (hopefully with the traditional hockey stick revenue curve,) while one in an Existing Market might be generating cash in 12-18 months... Sometimes you invent something that is truly new and you have to slog through the adoption process. The mistake I used to make is deciding to position a product as "new" when resegmented made more sense. (I liked the fact that in New I had no competition.) No one will stop you when you do this, it just means you need a much larger marketing budget than if you are in an existing market or are resegmenting an existing market. It may be better to position as existing or resegmented. This is all about strategy.