EARLY DRAFT / thoughts
group of seekers. with similar progress sought (not necessarily the same progress, but sufficiently similar). having access to the offering (this is why software has driven recent growth? AI democratising access to expert knowledge? ). Does deciding to engage belong in definition?
disruptive innovation can be defined by market (group of seekers who see offering as good enough, compared to main market)?
blue ocean is identifying group of seekers not previously identified by altering profile of progress offered and finding a new progress sought?
The market
Now we can reveal that defining the market – a term that is relevant now we are discussing service – is directly related to progress sought. The market is the group of progress seekers who want to achieve sufficiently similar progress.
The market is the group of progress seekers who want to achieve sufficiently similar progress.
This is not the typical way of segmenting today. Which is usually based on demographics or similar metrics. But it is based on Levitt’s insights in his 1975 paper ”Marketing Myopia”. And on Christensen’s retelling in “Marketing Malpractice”:
The great Harvard marketing professor Theodore Levitt used to tell his students, “People don’t want to buy a quarter-inch drill. They want a quarter-inch hole!” Every marketer we know agrees with Levitt’s insight. Yet these same people segment their markets by type of drill and by price point…
Marketing malpractice” Christensen, C. M., Cook, S., Hall, T. Harvard Business Review (2005)
And don’t forget that progress comprises functional and non-functional elements; informed by context. All three elements are likely to influence your market segmentation. That is also to say progress offered should be tailored to those three elements.
Market segmentation by progress sought
Remember our toy example from exploring progress?
| quality | progress elements | progress sought |
|---|---|---|
| basic | * functional | * move myself 100km |
| better | * functional * non-functional | * move myself 100km * as directly as I can |
| best | * functional * non-functional * contextual | * move myself 100km * as directly as I can * during a morning rush hour |
If we just consider functional progress, our potential market may appear to be big. In our example the market is all progress seekers wanting to move 100km. Including the non-functional progress of ”as directly as I can” likely, however, reduces the market size. But it raises the likelihood of more individuals in the smaller market choosing your offer. And the market shrinks further if we include the context. But again, more individuals in that smaller segment are likely to choose your offer.
Alternatively, you can see including the three elements of progress as a way to create multiple offerings. Of course, as we step away from a toy example, then non-functional progress likely becomes a set with rankings. Our example might include “comfortably”, ”fast”, or “with interesting nature views”. And they can be traded off against themselves or some of the hurdles we’ll soon introduce. “Comfortable” could be traded against ”price”. Or you may determine that ”fast” is less relevant to progress seekers that you can mostly ignore it when segmenting.
We’ll have more to say on markets later. Including how tools from Blue Ocean Strategy can help us find uncontested functional, non-functional and contextual markets.