WEEK 5 Flashcards
4 MARKET TYPES
Existing Market
New Market
Niche Market
Clone Market
- Competitors exist
- Customers want and need better performance
- Technology is usually the driving factor
- The positioning is driven by the product and how much value customers place on its features
- The risk is to think that competitors are dumb or too slow
- There is no “chasm” that you need to fill. The chasm is the gap between early adopters and mainstream customers in a market
Existing Market
Advantage of Existing Market
There’s little or no risk when entrepreneurs and investors enter this market
customers and their preferences are unknown and direct competitors are nonexistent
New Market
- Customers do not exist in the present, so revenue generation takes years
- Market size is zero
- Customers need to be made aware of their needs
- You must consider what factors can you create that has never been offered
- The chasm is biggest here because you will only be selling to the very early adopters
New Market
It is a hybrid between a New market and an Existing market in the sense that it is a New Market created from a small segment from an existing market. The features of this market type are:
* Low cost
* New Niche
Niche Market or Re-segmented market
customers are known because you copied an existing market.
Clone market
In this market type, you are going to localize all those specific issues for your country or region. That said, it takes a foreign business model and adapts it to local conditions. There are no competitors if you are the first one and the risk may be in misjudging the local needs
Clone Market
Adapts a foreign business model to a local condition (language, culture, import restrictions, and local regulations)
- Needs a large number of customers, typically >100 million
Clone market
It is the practice of dividing your target market into approachable groups. You create subsets of a market based on demographics, needs, priorities, common interests, and other psychographic or behavioral criteria used to better understand the target audience.
Market Segmentation
4 Basic types of market segments
Geographic
Demographic
Psychographic
Behavioral
It gets better referrals for entrepreneurs, more repeat business, and have less competition due to its unique nature. All these advantages also result in easier marketing of product/service.
Niche markets
To find your Niche:
Acquire focused knowledge about your
market
Develop a mental picture of your customers
Understand what prompts customers to
want to buy products/services
It refers to the market demand for a product or service. It’s the maximum amount of revenue a business can possibly generate by selling their product or service in specific market.
Total Addressable Market (TAM)
Estimates the portion of the TAM, that you can acquire given your limitations - geographic, demographic, marketing and advertising spend, logistics, etc.
Serviceable Addressable Market (SAM)
Determines that how many customers from the SAM would realistically purchase your product. It is a subset of the SAM that is restricted by:
Natural barrieres such as distance or language
Limited capacity, for example production capacity or marketing reach
Lost of market share to competitors
Approaches to calculating market size
Serviceable Obtainable Market (SOM)
Two approaches to calculating Market Size
Top Down Approach
Bottom-up Approach
It is calculated by determining the total market, then estimating your share of that market. Starting from TAM - SAM - SOM
Top Down Approach
This is the approach where it tries to estimate the actual users of the product and how many would realistically become customers.
Bottom-up Approach
The aim is to collect the information about your ideal customer persona who are likely to buy your product or service . It will help you tailor the user experience through targeted design.
Customer Persona
Types of Customers
Innovators
Early adopters
Early majority and Late majority
Laggards
They are these buyers who love to have innovative products. They are seeking this all the time and it is part of their lifestyle
Innovators
appreciate innovations and are ready to adopt new products even if they perfect or not developed from a technical point of view.
Early adopters
Innovative technology is not the key for making their decision. They are driven by analysis of different standards factors such as price, quality, needs, etc.
Early and Late majority
They are the last to adopt an innovation. Unlike some of the previous categories, individuals in this category show little to no opinion leadership. This individuals typically have an aversion to change-agents.
Laggards
Using this tool, you will be able to arrive at a solution that will solve your customer’s problems and at the same time, bring them benefits that the existing alternatives do not. It also helps you understand the customer and how your products and services create value.
Value Proposition Canvas
Describes the features of specific value proposition in your business model in a structured and detailed way.
Value Map
Describes a specific customer segment in your business in a structured and detailed way.
Customer Profile
Type of Competitors
- Direct competitor
- Indirect competitor
- Replacement competitor
It is someone that offers the same products, within the same category as you
Direct competitor
It is a business that sells a product or service in the same category as you, but it’s different enough to act as a substitute for your product or service.
Indirect competitor
It is a business that sells a product or service that’s both different in category and type than you, but one which your customers could choose to spend their money instead.
Replacement competitor
