Discover And Identify Your Market Type

There are 4 types of startups - and not knowing what type you are can cause big challenges. We call this discovery process "Market Types". There are 4 types of markets that you have a choice of (and the market you choose will be the type of startup you are).

The type of market will change everything you need to consider. Everything from:
market size, your sales model, how much funding you'll need and who your customers will be.

Let's explore each type of market and their defining factors:

1. Existing Market

In this market type:

  • competitors exist
  • customers want and need better performance
  • usually technology driven
  • the positioning is driven by the product and how much value customers place on its features
  • the risk here is to think that competitors are dumb or too slow
  • no "chasm" (which is the gap between early adopters and the main stream customers in a market)

2. Resegmented Market

In this market type:

  • what factors can you eliminate that your industry has long competed on?
  • what factors can be reduced well below the industry standard?
  • what factors can be increased above the industry standard?
  • what factors can be created that have never been offered?
  • there is a bit of a chasm in this type of market

3. New Market

In this market:

  • customers don't exist today
  • market size is zero
  • how will they become aware of their needs?
  • what factors can you create that has never been offered?
  • the chasm is biggest here because you'll only be selling to the very early adopters

4. Clone Market

In this market:

  • takes a foreign business model and adapts it to a local condition (language, culture, import restrictions, local control)
  • needs a market large enough, typically >100 million


If you are in a new market, it's critical that all stakeholders realize this and accept the fact that you won't have a "hockey stick" revenue or growth curve.... it may actually be flat for a few years. You shouldn't build your business or approach it the same way you would in an existing market.