Step 1

MARKET SEGMENTATION
Entrepreneurship pyramid

Source: MIT OCW 15.390: New Enterprises

Market segmentation

Systematically identify and evaluate the top market

opportunities.
This generally is a long process but it is important to
not let it go on indefinitely.
It is better to try a market and find out if it will work
out and learn that it will not rather than be a state of
analysis paralysis.
Set a reasonable time frame and aggressively explore
multiple markets in an exploratory fashion (not a sales
manner) with primary open mind market research
techniques
How to market segment?

1. Brainstorm all possible market opportunities for your idea or technology.

2. Narrow the market opportunities. For each opportunity, consider the following?
Is target customer well funded?
Are they readily accessible to your salesforce?
Do they have a compelling reason to buy?
Can you deliver the product with or without partners?
Are there entrenched competition that could block you?
Can you scale into other adjacent market if you win your target market?
Does the idea follow your values and is ethical?
3. Talk to your customers
Find your potential customers and talk to them.
4. Market Research: Know all the key stakeholders and as much market
information as you can get.
Article 7 types of market segmentation

https://blog.udemy.com/types-of-market-seg
mentation
/
Step 2

SELECTING A BEACHHEAD
MARKET
What is a beachhead market?

http://ocw.mit.edu/courses/sloan-sch
ool-of-management/15-390-new-enterpr
ises-spring-2013/video-tutorials/lec
ture-7
/
Use same criteria as before to select a beachhead market

Smaller markets tend to be better, and its

crucial that you pick just one and ignore
the others (for now). Then, further segment
your chosen market until it meets these
conditions: customers buy similar products
for similar reasons, and they talk to each
other (for word of mouth)
How to Chose Beachhead Segment

1. Is the target customer well funded and are they readily accessible to our sales
force?
2. Do they have a compelling reason to buy or well defined pain/need?
3. Can we today, with the help of partners, deliver a whole product to fulfill that
reason to buy?
4. Is there no entrenched competition that could prevent us from getting a fair
shot at this business?
5. If we win this segment, can we leverage it to enter additional segments?
6. Can we show results in a time frame consistent with the founders personal
agendas

Select your top 5 particularly interesting market opportunities, where a market

opportunity consists of a specific end user and one or a handful of applications
different segments might merge together to form one larger segment

Pick the low hanging fruit, not necessarily the biggest market out there
PRIMARY MARKET
RESEARCH
Primary market research

This involves talking directly with customers and observing

them:
When talking to customers, encourage the flow of ideas,
dont retrain them or try to gain a commitment
Understand customer pain points in order to design a
solution that is of great value to them
Listen and get people to talk
Be open minded and unbiased and never presuppose a
solution
Have the ability to explain what the essence of your proposed
offering might look like while also being flexible
Organize your research
The main categories you are trying to obtain information for each market are:

1. End user: Who specifically will be using your product? Think about decision making unit and decision
making process required to purchase the product
2. Application: What would the end user be using the product for? What task would be dramatically
improved by your new venture?
3. Benefits: What is the actual value that the end user would gain from the use of your new product? i.e.
time savings, cost savings, additional profit etc.
4. Lead customers: Who are the most influential customers that others look to for thought leadership
and adoption of new technology? These are sometimes referred to as lighthouse customers because
they are so respected that when they buy, others look to them and follow their lead gaining instant
credibility
5. Market characteristics: What about this market would help or hinder the adoption of new technology?
6. Partners/players: Which companies will you need to work with to provide a solution that integrates
into the customers workflow?
7. Size of market: Roughly, how many potential customers exist if you achieve 100% market
penetration?
8. Competition: Who, if anyone, is making similar products real or perceived? This is from customers
perspective and not just yours
9. Complementary assets required: What else does your customer need in order to get the full solution,
that is, to get full functionality from your product?
Prep work for primary research

Write an email draft, phone script and face-to-face script to initiate the ask
for primary market research
Draft questions to ask the potential users of the product in order to obtain
necessary research information
Work within each team to simulate an actual customer conversation and
practice the drafted questions
How are you going to conduct the research?
For B2B clients, find a specific contact and/or influencer and get their
information (phone number, email address)
For B2C clients, determine a specific location to perform the market research or
determine who to contact if you already have some individuals in mind
Think about how you are going to divide up the work. Should different people
make calls while others interact with people? Should the technical lead remain
behind to build the product? How will the deliverables person play a role in this?
Determine when the earliest time possible would be to conduct the research
Step 3

BUILD AN END USER

PROFILE
Potential characteristics to include in the end user
profile

Gender
Age range
Income range
Geographic location
What motivates them?
What do they fear most?
Who is their hero?
Where do they go for vacation? For dinner? Before work?
What newspapers do they read? Websites, What TV shows do they watch?
What is the general reason they are buying this product? Savings? Image?
Peer pressure?
What makes them special and identifiable?
What is their story?