“My Friends” is not a Market Segment

“My Friends” is not a Market Segment

Here’s the scenario. You have a startup that offers a cool new online service. You release it and put the word out to all of your friends. “Hey, do me a favor and please sign up for my new service!” Loads of them do. “Amazing,” you think to yourself, “I’ve got traction!!” Not so fast bub. What happens next? You’ve targeted all of the friends you have. Who do you target next? You have no clue because you haven’t focused on a market segment, just a (somewhat) random group of people. Traction Needs to be Traction in a Market Not all traction is created equal. In fact, I would argue that you need to have traction in a market segment (or segments) in order for it to be meaningful. And by meaningful I mean the kind of traction that gives you an indication that you can scale and a path to doing that. What is a Market Segment? A market segment has 2 key attributes: Identifiable – I can describe the segment in such a way that it can be specifically targeted. This can be demographics (new mothers under the age of 30 in New York) or role driven (IT managers working at companies with less than 500 employees) or company-oriented (Canadian retail banks with branch offices in different provinces) or even environment driven (companies with large Oracle data warehouses in North America). The more specific this is the easier it is to identify the folks and target them. Common set of needs – This is the need or problem that your solution solves. Examples would be: a need to...
Market Point of View: Do You Have One?

Market Point of View: Do You Have One?

One thing that I believe that startups can do pre-launch to market themselves is to start talking about the problem (in a broad sense) that they intend to solve and their “point of view” about a market.  Being able to articulate a point of view about a market is a good starting point for building your messaging so I thought it would be work diving into this more in a post. What is a Market Point of View? A market point of view is essentially your philosophy on how a market should best be served. It’s the big picture idea that underlies why your product is different (and better) from what is out in the market today. Prospects that share your point of view about how a market’s challenges are best solved will clearly understand the value that you deliver with your product. Here are some examples of differing points of view about a market: Best of breed vs. integrated one size fits all – At several of the companies I’ve worked at this was our main difference in philosophy about the market.  We were up against large competitors that offered tightly integrated solutions with functionality that spanned several markets.  There were obvious benefits for customers that wanted all of the pieces and preferred dealing with a single vendor for the whole solution stack.  Our point of view however, was that some customers would be better served by a more narrow offering that did only one thing but did it very well. We noticed that some customers didn’t need the breadth of functionality our competitors offered and were wary...

Should Your Horizonal Startup Focus on a Segment?

Over on Sprouter, I’ve been answering startup marketing questions and I keep getting variations on this one (I’m paraphrasing): We are developing an application similar to Yammer. I’m struggling with defining my target market and positioning because my product can be used by small or large organizations in various industries. Do I need to focus on a niche or not? I know it’s important to go after a specific market segment in the beginning, but I don’t think Yammer did this and they are successful! Market strategy isn’t as transparent as you might think.  Yammer seems like a good example so let’s look at them.  You can see a partial customer list here.  About half of the customers listed are in “Technology” or “Internet”.  There is anther group called “professional services” which includes folks like Deloitte and Edelman who either service tech clients or resell technology. Even some of those listed in other categories I might call Technology as well (For example, I wouldn’t call Pitney Bowes “Manufacturing” per se and Swiftcurrent Strategies is a social media consulting business that happens to focus on “Government”).  It’s possible they didn’t focus on technology as a segment.  Maybe they focused on “folks that understand the value of Twitter” which ended up being a lot of tech and services companies focused on social media.  However it happened, I can see an obvious segmentation there. Regardless of whether other startups are segmenting or not – should yours?  I personally see some obvious benefits to taking a more targeted approach: 1/ If you have sold one deal there you know you can sell another...

What’s Market Strategy and Why Should you Care?

Market strategy is one of those things even product marketers don’t always understand.  Your Market Strategy outlines how you plan on moving from early adopters to more mainstream market acceptance.  Walking some folks through my New Marketing Framework last week, it was clear to me that “Market Strategy” was not intuitively understood.  Here’s a primer: What’s Market Strategy? Market strategy is your plan for how you are going to move from segment to segment to gain overall adoption and share in your market.  In Geoffrey Moore’s Crossing the Chasm he describes how you move from early adopters to a mainstream audience through a “bowling alley” where you define a set of pins (niche markets) and as you knock over each pin (meaning you capture a significant share of that niche market) you can move on to adjacent markets.  Your market strategy defines what your lead pin market is, how you will knock that pin over and then what adjacent markets you will go after next. Why you Need a Market Strategy You need a market strategy to help make sure you focus your (typically very limited) marketing resources on the things that are going to get you the most bang for your buck.  I believe you need one for any product but it’s critical for products where the value of the product increases the more people are connected and using it.  It’s also very important when you have a very new market and visibility (meaning how many people even know your solution might exist) is important for adoption. What Does a Market Strategy Look Like? Let’s say this is...

Microsoft and the Market for “Everything”

The lead story in the Sunday New York Times Business section this week focused on Microsoft’s broad business strategy.  Titled “Forecast for Microsoft: Partly Cloudy”, the piece included interesting quotes from various Microsoft executives discussing how cloud computing fits into their overall strategy and how they differentiate themselves.  This paragraph caught my attention: (Microsoft CEO) Steve Ballmer contends that Microsoft is the only company prepared and positioned to merge computing from both ends – the desktop and the cloud.  “We’re just investing more broadly than everybody else,” he says, adding that when it comes to software, “I want us to invent everything that’s important on the planet.” (emphasis mine) How’s that for a mandate? What does Microsoft do? Everything. Microsoft is one of the few vendors out there trying to simultaneously serve both the business and consumer markets.  While it’s true they have huge resources, even big companies run the risk of being spread too thin.  On the surface Microsoft’s $10 billion budget for research and development seems large enough to tackle “everything” until you start looking down a list that includes desktop software, data center software, developer tools, health care systems, video game consoles and games, music payers, phones and phone software, Web properties, and office collaboration products. Offering customers a broad set of products and services is one of its great strengths, according to Microsoft.  Being able to offer solutions spaning PC’s, browsers and a proliferating set of hand-held devices (part of what Ray Ozzie, chief software architect at Microsoft calls “the gizmo revolution.”), is valuable and part of what sets Microsoft apart from its competitors. But...
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