The 4 Market Types
There are 4 strategies startups can take which can affect their market size, positioning, sales, customer adoption and how long it might take to profitability. This was highlighted by Steve Blank in his blog. Different market types require different strategies.
- Entering an existing market. The user needs and market are well-known. Market share should grow incrementally from day one in a linear way.
- Resegmenting an existing market. This involves identifying a large enough group of underserved end users and providing a solution tailored to their needs.
- Creating a new market. This often occurs because of new technology. It might take years for market adoption to take place.
- Cloning a market. Taking a business model that works somewhere else and replicating it in another market while accounting for specific local needs.
Here are some insights into user needs, risk and examples put together by me.
| Market Type | Customers | User Needs | Competition | Risk | Examples |
|---|---|---|---|---|---|
Existing Market | Known | Performance, affordability, integration. | Exists. | No compelling competitive advantage, Underestimating incumbents. | Microsoft Teams, Zoom, Amie. |
Resegmented Market | Possibly Known | Performance, affordability, integration. | Many if we're wrong. Few if we're right. | Market size being too small, No real need. | Unbundling, Figma, Ryanair, Startup Jobs. |
New Market | Unknown. | Transformational improvement. | No direct competition or established player. | Estimating Market Size, Premature spending, Awareness Creation | Airbnb, Uber, Dropbox. |
Clone Market | Possibly Known | Localised | No direct competitors if we re the first. | Failing to address local needs. | Alibaba (Ebay), Didi (Uber), Rocket Internet. |