For startups that have developed a new product and try to enter the market, there are not many options. As an ex-startup founder, I cannot overestimate how important it is to know and understand them. Otherwise, startups are doomed to fail.
New product, new market
- When to consider it: you offer dramatically new technology and own 100% market share by definition. AND: you have a lot of money.
- How to do it: explain what your product is about, why and how to use it.
- Be aware of: your target users will not stop using the traditional product. Unless you offer something radically new (automobiles instead of horses).
New product, existing market
Here you can either select the entire market or a specific niche. For targeting at a broader audience, you have to emulate the strong points and approach of the market leader. In particular, you have to offer compelling features and the best product functionality. Which is not available to startups by default. Thus, you can only re-segment market to pick a niche.
- When to consider it: you want to steal the market share from existing players.
- How to do it: you either offer a sustainable, significantly lower price OR you offer a unique functionality targeted at a specific group.
- Be aware of: target users will stop using the competitor’s product. Moreover, you will expand the market size. If you choose to offer a dramatically lower price, you get people who could not afford the product before. If you offer a unique feature set, you get new people as well, who could not find an adequate fit for their needs.
Now, the most important question: should I choose (1) or (2)?
The answer is not that simple. First, most likely you are not a disruptor. A true technology innovation requires huge investments, which are normally not available to startups. Second, your customers might have never heard about the technology before. If it’s the case, then… proclaim your product an innovation and see how far it can get you :).