Assignment 4: Market Definition Section (version 1.0)
Use both your extensive primary market research ("bottom-up") as well as "top-down" sources—the Internet, trade magazines, trade shows, Dewey library resources, etc. to figure out what the current market is for your product/service, and what options they have with regard to your solution.
Even if there is no existing market for your product/service, talk about how your target customer is currently spending his/her money, time and resources, and how you intend to take an increasing slice of that money, time and resources. Remember: There are always competitors, even for seemingly innovative products. And many times for customers, an appealing alternative to your solution is the option of doing nothing.
For the section on market segmentation, you might want to answer questions like:
- What is the total being spent on the entire class of products/services of which mine is a part?
- What portion of that total is spent on my segment?
- How are these numbers changing over time?
- On what does market growth depend (lumber sales as a function of new home sales as a function of interest rates)?
- Is your opportunity a function of the overall market growing, or of a shift from one type of product to another?
- How is the market segmented? Choose one or more ways of slicing it. Examples you might consider are:
- By industry: "x% is sold to financial services companies"
- By finer definition of product type: "x% of tire sales are high-performance tires, y% snow tires"
- By technology risk takers: "x% is sold to innovative early adopters"
- By geography: "x% is sold to U.S. markets, y% of that is on the East Coast"
- By features: "x% of customers identify fast service as the top reason for buying"
- By existing competitor: "x% buy Coke, y% buy Pepsi"
- By type of competitor: "x% of the market is served by mom-and-pop companies"
At the end of this section, you should now have a logical flow from your target customer profile and persona to a highly credible initial TAM and then a larger TAM for markets that you may address later. You will also generally have yourself positioned as the most attractive solution and this will be solidified in the Competitive Advantage Section which will follow shortly. Again, it is important that you do all the steps on schedule and then refine further over the remainder of the semester.