I have one question remaining open:

As Nivi was just pointing at, do you consider your market as a new market when the technology is disruptive enough to bring behavioral changes ? For example: Excel sheet => Desktop Software (bringing process automation) => SaaS (bringing the service layer).

Do you consider SaaS as a re-segmented market or a new market ?

Thank you for your great book.

Your definition of a New Market has always been confusing to me and your previous comment is highlighting my confusion. You say it is “enabling customers to do something they never could before.”

I think a better definition of a New Market is “enabling customers to do an existing job with a new product”.

1. What’s an “existing job”?

Customers want to do a “job”. And Christensen taught us that trying to get customers to embrace new jobs is an “uphill death march through knee-deep mud.” Customers very rarely adopt new jobs.

Customers have a job of communicating with their kids and they’ve used Facebook, cell phones, land lines, telegrams, and horses to do it. Cell phones didn’t let customers “do something they never could before.” They could always communicate with their kids.

2. What’s a “new product”?

A cell phone was a new product that let customers do an existing job. It wasn’t a better version of an existing product. It wasn’t a cheaper or niche version of an existing product. It was a new product.

Perhaps you can determine whether a product is new by asking customers to name the competition. If they can’t name anything, you’ve got a new product that you can position in a new market (or in non-new market by comparing your product to substitutes (there are no direct competitors in this case)).

What do you think?

In 1989, if we wanted people to join AOL, we had to first explain what a modem was, and bulletin boards, and e-mail. In 1991, it was easier: “You know Prodigy? Like that, but better”. What made it so easy? Prodigy spent $50 million on advertising and in-store displays.

Oh, and the really fun part: When you’re in a new market, your competitors may not realize they’re your competitors. For the first few years, one prominent Prodigy advertiser was America Online.

Sometimes you invent something that is truly new and you have to slog through the adoption process. The mistake I used to make is deciding to position a product as “new” when resegmented made more sense. (I liked the fact that in New I had no competition.) No one will stop you when you do this, it just means you need a much larger marketing budget than if you are in an existing market or are resegmenting an existing market. It may be better to position as existing or resegmented. This is all about strategy.

2. What I remind my students is that in Customer Discovery you leave your slide deck at home. You leave the building (physically or virtually) and are out testing hypotheses – extremely difficult for a passionate entrepreneur.

steve

Thanks for these posts; they are really helping me in getting our CEO to understand the importance of getting outside the building.

A couple of quick questions:

1.) It seems that sometimes an existing market undergoes a change so discontinuous that it is almost a “new market” exercise (the WalkMan was here well before the iPod, for instance). Is there some defining factor that easily distinguishes the difference?

2.) When talking to prospective customers during customer development, what methods do you recommend for not biasing their responses through your queries? I think a lot of entrepreneurs speak with such enthusiasm about thier own ideas that they may inadvertently illicit invalid responses.

Thanks!

KC