MARKET IDENTIFCATION

Discover new opportunitiesBy selecting your market category

Henry Ford once said “if I had asked people what they wanted they would have said a faster horse.” So, he didn’t listen to customers. He didn’t fit into the horse and buggy category. He created a new category called the horseless carriage.

There is a massive difference between competing in an existing market category, and creating your own new market category. When you create your own category, you are creating new demand rather than competing for existing demand. This is the reason “product market fit” is such a limiting idea.

Some new products are continuous which means they simply improve the current method and the category is already in the mainstream. But if a new product is truly different from everything else, is it called discontinuous. With discontinuous innovations you must begin your journey with innovators at the beginning of the technology adoption lifecycle.

Step #1 is always asking that question: is my product continuous, or discontinuous? And that depends on the category. You either improve a category or you disrupt it.

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market category
Technology adoption lifecycle

Success begins with category selection

Market identification is the part of the Customer Alignment Lifecycle that surprises most people. You must locate your “market category” on the adoption curve first. And then everything else follows.

A market category is simply an identifier for the market place that labels your competition, partners and value proposition. The category can be focused on core technology, a product or a system. It can either be a new category, an existing category or a sub-category of an existing category.

When looking at market categories in terms of the technology adoption lifecycle, we see that a market should be defined as a group of people who have the same innovation-adoption needs and characteristics. This insight has a significant impact on the category-selection process and on the availability of the markets that we select for pursuit.

Formulas that fail

Successful founders introduce the world to something unique and different. The way they do that is by moving their thinking from the way the world is, to the way they want it to be. The greatest innovators teach the world to think differently with a fresh idea — either a new take on an old problem or by solving a whole new problem or by having a whole new idea.

The concept called product market fit traps entrepreneurs and inventors into thinking you must listen to customers who are only familiar with an existing category. Those customers will naturally ask for something better (a continuous innovation) rather than something different (a discontinuous innovation).

This is a formula that fails because the greatest potential for growth is in discontinuous innovations, and customers are often unable to talk about something they’ve never seen or used. Plus there is no “fit.” The new market category doesn’t exist yet.

When you’re inventing and bringing anything new and different to the world, listening to customers who are used to an existing category is a recipe for failure.

Know exactly what your customer wants

Your focus should always be on the people using your product. They are the ones for whom value is being created and the reason why the market and the product exists.

Products are initially used by early customers (innovators and early adopters) who base their purchase decisions primarily on the product’s functionality. Then, once the demand for functionality has been met, vendors must begin to address the need for reliability that is demanded by an initial wave of mainstream buyers. Additional growth occurs when market followers require that vendors meet their needs for convenience. Laggards are mostly concerned with price.

Despite a track record of proven success, this sequenced approach is counterintuitive to most business managers. When struggling for survival, an organization will find it incongruous to focus on the peculiar or specialized needs of a small group of potential buyers, before addressing the more common needs of larger groups. Too often managers attempt to serve an entire market all at once, and unintentionally delay or block revenue growth.

At High Tech Strategies, we know all of the challenges associated with market and category selection. With three decades of experience, we are the best in the world at defining your market in a way that is actionable. It is part of our market-strategy process, the Customer Alignment Lifecycle. We show you how to discover and profit from new opportunities by defining and targeting new categories. Learn more about our growth strategy consulting services.