

Start-ups: Understand what you mean when you say "market" - eoghan
http://blog.intercom.io/chinese-gloves-and-addressable-markets/

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wisty
The biggest point this is missing - the cost of acquisition. If you sell your
product to 0.1% of China, you'll have tonnes of revenue. If you have to send
salesmen out to knock on half a billion doors to get that 0.1% to buy, your
profits won't be so hot.

Or, you could buy adwords. You can try a "viral" strategy, which magnifies
your acquisition (by a factor you can calculate - if 90% of your customers can
sell to a friend, you get 1/(1-0.9) = 10X the acquisitions you'd get without
the viral strategy), but it's not a holy grail unless every customer brings in
_more_ than 1 friend. Guess how often that happens?

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destraynor
Hey Wisty,

Good point. I left this out as I wanted to do a separate post on the
importance of profitably acquiring customers for start-ups, but there's a big
overlap here with the dangers of hitting large markets that I should have
included it.

Cheers, Des

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davemel37
The only thing I disagree with is the limiting mindset of who your addressable
market is... A better formula would be deciding who you WANT your addressable
market to be, and finding a way to reach them.

For example, a local cafe might appear to be limited by geography, but could
just as easily build a reputation beyond their borders and become the Omaha
Steaks of Coffee.

I think you subtly made the point that things like making your product and
experience remarkable, will expand your addressable market, but I think it is
important for businesses and startups to realize that "Their Market" could be
by design, and doesn't have to limited to the apparent cards they were dealt.

In fact, any marketer worth their salt should be able to find any consumer or
target market no matter how big or small, no matter where they are and no
matter the barriers and limitations and find a way to engage them.

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ChuckMcM
I too prefer this way of thinking. It is the kind of thinking that leads to
coffee 'trucks' rather than coffee 'shops'. As in "Hey my potential customers
are all over the city, but not all at the same time ..."

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davemel37
"Happy customers beat the crap out of any marketing team you could hire..."

You should beat the crap out of your marketing team if they aren't bringing
you happy customers.

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K2h
I dunno.. I hate marketing as much as the next engineer, but just because a
customer is happy doesn't mean they will bring you as many new customers that
a good marketing strategy will. They could be happy and never come back.

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dkrich
It's called market segmentation and is fundamental to most businesses. I say
most businesses, because there are always cases of businesses that succeed
because of dumb luck or just being in the right place at the right time.

The statement "Happy customers beat the crap out of any marketing team you
could hire" is pretty ridiculous because it downplays the importance of great
marketing, without which, most products will get ignored.

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NickNam
This is a great breakdown of the different markets that exist. I think it can
even help in calculating "back of the envelope" numbers, because you know you
need to, "drop some zeros" a lot of the time. Pricing is kinda glossed over.
But isn't Freemuim disrupting some of the 'Age old formulas'?

