Module 4

MODULE 4
MARKET IDENTIFICATION
MARKET IDENTIFICATION
identify the need
At the end of this video of the market.
lecture you will be able to: validate the market
for the startup idea.
• The first thing that you need to do is identify the
market. It is important to determine your total market
potential as well as the amount of that market that you
may be able to reach.
• It is important to be realistic when validating your
market because you need to make sure that the
market that you serve is large enough and that there
will be people willing to buy your product.
WHAT IS CUSTOMER
DEVELOPMENT?
• Customer Development is a four-step
framework developed by serial entrepreneur and business
school Professor Steve Blank for discovering and
validating the right market for your idea, building the
right product features that solve customers’ needs, testing
the correct model and tactics for acquiring and converting
customers, and deploying the right organization and
resources to scale the business.
• At a high level, Customer Development is
about questioning your core business assumptions. In
other words, Customer Development teaches that rather
than assume your beliefs about your business to be true,
you should apply an engineering, or scientific method, to
what is really not a scientific endeavor (building a
business), in order to validate the ideas.
• The primary advantages of implementing the framework are
that you don't spend gobs of money discovering what works,
but rather save the money for executing and scaling what
you have already shown to work.
• An organization applies a learning process, rather than
merely executing what you assume to be the right business
model. If implemented properly, Customer Development
helps a business become highly focused, capital and
resource efficient, and while not a guaranteed success,
more likely to find Product-Market Fit and market traction.
The process resembles the scientific
method:
• Observing and describing a phenomenon
• Formulating a causal hypothesis to explain the
phenomenon
• Using a hypothesis to predict the results of new
observations
• Measuring prediction performance based on experimental
tests
When building a business, the process is used to discover, test
and validate the following your business assumptions:
• A specific product solves a known problem for an identifiable
group of users (Customer Discovery)
• The market is saleable and large enough that a viable
business might be built (Customer Validation)
• The business is scalable through a repeatable sales and
marketing roadmap (Company Creation)
• Company departments and operational processes are created
to support scale (Company Building)
1. Problem-Solution fit: You validate with prospects that a
specific solution will solve a known problem to such a
degree that they will buy it.
2. Minimum Viable Product (MVP): You build a product that
achieves Problem-Solution fit and have validated it with
prospects.
3. Sales Funnel: Through interviews, surveys and analytics
you have crystallized a proposed "sales and marketing
roadmap," which lays out the customer's buying process
and the business activities you must undertake to move
prospects through the process.
• Companies that are at Product-Market fit should start
with Customer Validation.
• Customer Validation is about validating your proposed
MVP and sales and marketing roadmap. You're not
ready to scale -- hire outside sales, conduct a PR blitz,
etc. -- until after Customer Validation.
• You are at Product-Market fit, if you have built a product
that customers need and this has been validated by high
user adoption or through a significant number of paid
users, and to some degree adoption and retention are
"running themselves."
• Product-Market fit is an esoteric concept you only know
you've achieved after you've achieved it. It's like declaring
the "turning-point" in a game: only once you've won or
lost, can you reasonably hypothesize the actual turning
point.
IDENTIFYING THE RIGHT MARKET
perform market
segmentation
At the end of this video

lecture you will be able to: Identify the
appropriate market
segment for the
startup idea.
• Given the current state of the economy, having a well-
defined target market is more important than ever. No one
can afford to target everyone. Small businesses can
effectively compete with large companies by targeting a
niche market.
• Targeting a specific market does not mean that you are
excluding people who do not fit your criteria. Rather, target
marketing allows you to focus your marketing dollars and
brand message on a specific market that is more likely to
buy from you than other markets.
• This is a much more affordable, efficient, and effective way
to reach potential clients and generate business.
Market segmentation is the process of dividing a target
market into smaller, more defined categories. It segments
customers and audiences into groups that share similar
characteristics such as demographics, interests, needs,
or location.
When you know whom you’re talking to, you can develop
stronger marketing messages. You can avoid generic, vague
language that speaks to a broad audience. Instead, you can
use direct messaging that speaks to the needs, wants, and
unique characteristics of your target audience.
With dozens of marketing tactics available, it can be
difficult to know what will attract your ideal audience.
Using different types of market segmentation guides you
toward the marketing strategies that will work best. When
you know the audience you are targeting, you can
determine the best solutions and methods for reaching
them.
On digital ad services, you can target audiences by their age,
location, purchasing habits, interests, and more. When you
use market segmentation to define your audience, you know
these detailed characteristics and can use them to create
more effective, targeted digital ad campaigns.
When your marketing messages are clear, direct, and
targeted they attract the right people. You draw in ideal
prospects and are more likely to convert potential
customers into buyers.
Being more specific about your value propositions and
messaging also allows you to stand out from competitors.
Instead of blending in with other brands, you can differentiate
your brand by focusing on specific customer needs and
characteristics.
When you know what your customers want and need, you
can deliver and communicate offerings that uniquely serve
and resonate with them. This distinct value and messaging
leads to stronger bonds between brands and customers and
creates lasting brand lasting brand affinity.
Niche marketing is the process of identifying segments of
industries and verticals that have a large audience that can
be served in new ways. When you segment your target
market, you can find underserved niche markets that you can
develop new products and services for.
Targeting in marketing keeps your messaging and
marketing objectives on track. It helps you identify new
marketing opportunities and avoid distractions that will
lead you away from your target market.
Demographic segmentation is one
of the most popular and commonly
used types of market segmentation.
It refers to statistical data about a
group of people.
Psychological segmentation
categorizes audiences and
customers by factors that
relate to their personalities
and characteristics.
While demographic and
psychographic segmentation
focus on who a customer is,
behavioral segmentation focuses
on how the customer acts.
Geographic segmentation is the
simplest type of market
segmentation. It categorizes
customers based on geographic
borders.
• The Entrepreneur’s Guide to Customer Development Brant
Cooper & Patrick Vlaskovits
• https://www.quicksprout.com/how-to-identify-the-target-
market-of-your-startup/
• https://www.inc.com/guides/2010/06/defining-your-target-
market.html
• https://blog.alexa.com/types-of-market-
segmentation/#market-segmentation

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