Markets and Segments

Markets and Segments

What is a ‘market’ in this context?

  • How do you think about the market size?
  • Look at segments, value proposition and market entry
  • Segments: For your market or customer hypothesis, you need to understand the market(s) and segment(s) you are serving.
  • Notice that these are not black and white, they can be continuums or multi-faceted.
  • Types
    • Mass Market: Huge and undifferentiated. Horizontal, e.g. consumers age 12 to 18.
    • Niche: Highly specific: Vertical, e.g. Bicyclists
    • Segmented: your product serves more than one segment. Apple serves the consumer and education market segments
    • Diversified: your product serves very different markets: Amazon serves consumers and software developer
    • Two or multi-sided markets: brings two or more segments together: dating services, newspapers
    • there are others…

Market Entry

Existing market
  • Your customers (kind of) understand the problem and your solution
  • You have (kind of) competitors
  • Your customers will have to stop using another product

  • Sometimes your entry can grow the number of customers, sometimes you fight it out (e.g. Facebook for Seniors. Is that a new or existing market?)

  • So you can:
    • ENTER an existing market, e.g. Android joining iPhone and compete directly
    • RESEGMENT an existing market - with one of value propositions above, e.g. iPhone joining Blackberry
    • RESEGMENT a market - by going after a sub-component of it, e.g. Tesla entering automobile market
New Market
  • Your customers may not know they have the problem
  • You have to teach/explain them why your product/service exists
  • They will have to find budget (money) to pay for it.
  • This is a very expensive process for you
  • So you can:
    • CREATE a totally new market, e.g. Palm, creating the PDA market
  • Discussion: Let’s see what advantages and challenges each example has

Value Proposition:

  • For each segment you need to express what value your product or service is creating.
  • If you cannot express it than you probably should not be trying to address that market.
  • It’s not just that you are offering something ‘new’ to that segment. It could also be:
    • cheaper (to buy or to use)
    • faster
    • more convenient
    • better designed
    • more customized
    • brand
    • safer/less risky
    • more available (segment couldn’t get it, use it, access it before)