- How does market type affect not only marketing but your company? Ultimately, from a marketing perspective, market type is gonna affect how you actually execute your marketing plan and sell to your customers. Now, if you remember, there are three types of markets that you can actually enter into, so effectively, you have three options.
- One is you can enter into an existing market, but do so, understanding that you're going to be the weakest player with the least amount of resources within that market. Your competitors will already know their customers and the will also have probably a pretty large customer base that they're working with. So you're definitely at a disadvantage as you enter in these types of markets. You can provide a better advantage within an existing market by reframing the market and focusing in on a niche. The whole idea there is to really create clear, competitive advantage for you by focusing in on a niche that you can better serve than the existing incumbents. And then finally, what most startups look at is being disruptive, creating a new market. The problem with that is you're not going to have any competitors, but it's gonna require a lot of long-term customer education and it's a long road in terms of customer adoption. So when we think about market types, let's think about what they actually influence.
- Market types, the three that we talked about, will influence the type of customer you actually go after. It'll also determine, potentially, the valuation of your company because it may determine what size a market you're actually operating within. It'll also have an affect of how you actually go to market, how do you get the attention of buyers within your market, and what competitive barriers exist in terms of preventing you from selling to customers within that market.
- Now when you think about competition and selling to the customer, you also then have to think about positioning. And then finally, it affects the sales model that you adopt, whether it's a direct sales approach or a channel approach, and how long it will actually take to actually do the sale. If the customer is aware of the problem, there's no education required, so it's a relatively short cycle.
- But in a new market, let's say, the customer may, it may take time to educate the customer about the problem and more importantly, educate the customer about the benefits of using you as a solution.
- Now let's look at each one of these different types of markets, and we'll look at them with five different characteristics. First of all, for an existing market, you're basically attacking an existing market that has existing customers. Customers are well understood in this market. The customers are looking for a better widget that's higher performant. So you're typically going to compete on a better, faster product.
- Now again, the competition is advantaged, here, because they are the existing incumbents. They already understand the market and they already have a product that's probably pretty mature within the market. So the risk is really about whether you can actually compete against those types of companies.
- Now you may say I still think the existing market is more attractive, but I'm gonna better my odds by re-segmenting it, so I'm still gonna go after existing market, an existing type of customer, but I'm gonna be very focused on the value proposition that I give to that customer.
- Either I'm gonna give them lower cost to achieve their needs or I'm gonna talk about a new need or problem that I can solve. So in many ways, from a product performance stand point, this might be good enough for a low-cost product, or you've got some type of specialized features for a given niche.
- Now again, the competition here, is existing incumbent, so you still have the risk that comes with those competitors, but the other risk that sorta props up here, or crops up, here, I should say, is that what happens if your niche strategy fails?
- If you don't resonate, or the problem that you were talking about doesn't resonate with buying customers? New markets, again, are where most disruptive startups focus on.Here, you're looking for new customers that have new ways of using technology. That's part of the problem, though. You have to identify who those customers are and you have to also identify what really sort of resonates with them.
- So typically, it's going to be around simplicity and convenience. And what they're going to look for is maybe a product that is low in terms of traditional functionality, but it can be improved by new customer metrics around the particular solution because, after all, it's new.
- The competition, this is what is really great about a new market, there is none, or you may be on the same footing with a few other startups that have recognized the same opportunity or are now pursuing it. The risk here, is market adoption and typically, that risk revolves around something that we traditionally talk about as the chasm.
