Is your startup struggling to scale up? Or worse still, is it failing to do so? It could simply be a common case of the startup market type you’re aiming at, is just not that into you.

You’re only as good as the startup market type you choose

What do I mean by that? Well, it’s not that it doesn’t find you attractive; you’re just not “enough” of what that particular market or segment wants. I hope this doesn’t bring back bad memories of being stood-up or dumped (like me), but it’s the best analogy to get your attention. And to make you start doing something about it.

We can’t stress enough (or virtually highlight in bright luminous yellow marker) how important it is to “know” the right type of market for your startup or business venture. The phrase, “Ohhh I really think he/she is my type” needs to apply.

But, to quote another bad romantic comedy, how do you know? Well, just like when in love (which can be blind, stupid and many other things), there are some guidelines you can follow in entrepreneurship, as well. And we’ve gathered them here, especially for you.

What’s your startup market type?

There’s a phrase projected on a mirror in an art gallery somewhere in Zurich. And it says: “Pay attention to who is directly in front of you”. It’s a piece by Jill Magid, an American concept artist and writer.

I’m mentioning it here, because that’s exactly what you have to apply to the startup market type you are honing in on. Whether you are starting a new venture from scratch, or adding some awesome new features to your product, to make it “more relevant”, you must pay attention; at all costs.

Why? Because, like the renowned entrepreneur, investor, and software engineer Marc Andreessen says:

“When a great team meets a lousy market, market wins. When a lousy team meets a great market, market wins. When a great team meets a great market, something special happens.”

Apart from your team, it is your product that defines the type of market you will be targeting. And it is this same market that should define all decisions that follow.

No market, no product.

What good then, is a product without a market to target? Don’t answer that; it’s a rhetorical question, because the answer is pretty obvious. Destined. To. Fail. Unless there is a proven market to target your venture at, all of your efforts will be in vain.

In that case, any tech startups and tech SaaS services/solutions, are just another software development project (for the sake of writing code ). Wasteful development labor might get you something useful, such as sharpening your skills. And, as a failure, it could prove to be a good lesson for the future. But, in a few words, you’ve got to take into consideration the commercial aspect of your venture, and more specifically your target market.

Remember your business model?

As we’ve said, time and again, your business model is more important than your product. And your market is at the center of that model. If it’s not, it darn well should be.

In his book, the Four Steps to the Epiphany, Steve Blank quite rightly urges entrepreneurs to “stop playing the target market roulette game”. He emphasizes the importance of doing your homework properly, in this aspect. Unless your pockets are pretty deep, your time (and cash flow) to succeed as a startup is, indeed, limited. And so are your other resources. Ultimately, you need to define and learn all you can about your startup market type very early on in the process.

Learn from those more experienced

One way to hit the ground running, is to seek out and learn from more experienced entrepreneurs. They tend to plan far ahead and create their portfolio of business opportunities, much in the same way investors do when they decide on their investment portfolio. They follow a specific selection process to make sure their final decision carries the least risk; and thus the startup market type you’re targeting will also be a major criterion. If you can nail this aspect, then you will be much more successful in pitching your startup to investors, for example, later on.

Evaluate your ideas

Clearly then, it’s of high importance to evaluate your ideas before you get to the implementation stage. Think of evaluation as getting it from the right “angle”. You may have a great idea, but you may need to approach it from a different perspective, in order for it to gradually become a profitable and successful business.

Think about it; when you’re offering a service to potential customers — this includes additional interested parties, such as a marketplace if you weigh up your idea properly, then you can prevent a future (and perhaps costly) pivot, by making the right decision right from the beginning. Thus, saving you and your partners a lot of money, effort and frustration.

The opportunity pie – market size and market share

There’s a good reason for using pie-charts to display market share. Because all markets are literally a pie and everybody wants a piece of it! It’s essentially a question of whether your startup market type is a big enough pie to get a piece out of.

How big is this piece, then? The answer to that question will tell you if it’s worth the effort in the long-term. If it doesn’t exist — that is, you’re offering something new (which is not validated yet) — then it’s all about whether and how you’re going to create it. Increasing probability for a viable market to occur is not something static. Markets are ever-changing, evolving creatures.

How does your target market match your proof of concept?

The key exercise that will tell you whether your product will reside in a particular target market or not, is the proof of concept (POC). It proves your product has a place in a particular market or market segment. If you can verify this, you’re on the right track towards building a viable business around it.

Validating your market

So why and how do you validate your startup market type?

First of all, you must be aware of how crucial it is to validate your startup’s target market. And, of course, you need to make sure that you use the right method(s) to validate it.

Then, you need to do your homework. That’s doing your research and, above all, deciding on whether it’s a wise choice to go for it, or alternatively choose another path to follow. Carry out a detailed analysis, so that you have everything you need (the prerequisites for that specific stage) to proceed further. That is, decisions related to product features, sales channels, communication messages and everything that defines your product development, growth hacking; and your marketing strategy, as well.

Whether you’re targeting a new market or an established one, you’ll need to grab your audiences’ attention and convince them of their need/desire for your product or service. The thing that will change here, is your message. In the first case, you’ll need to convince existing customers to choose your product over competitor’s, while in the second one, you’ll need a bold statement to simply get noticed.

Types of markets

Right then, let’s have a look, in more detail, at the different types of markets, their characteristics, and how they define your decisions. We’ll also consider the steps you should take and how all this adds up to your chance of success.

You’re only as good as the startup market type you choose

Questions you need to answer before you begin

Like with everything else, you’ll need to have the answers to some practical questions before you get started. The type of market you’ll fall under, will somewhat direct your answers. And, to be honest, you’ll need to keep revising your answers throughout your journey since, as we mentioned, nothing is static. You’ll need to answer:

  • What are the key characteristics of the market you are targeting?
  • What are the basic criteria/prerequisites to enter this specific market (barrier to entry)?
  • Are there any challenges and risks that need your attention? And how are you going to deal with them?
  • How does the marketing strategy you’re going to follow differentiate, in comparison with other types of markets, in terms of launching (i.e. channel mix, priorities, and competitors — if any)?
  • And what about growth and profitability “prognostics”? In other words: What are your chances?

Market types

Here are the usual suspects:

  • Existing market
  • New market
  • Re-segmented market
  • Low cost
  • New niche
  • Clone market
  • Existing Market – playing it safe… or maybe not

An existing market is a market that, well, already exists! The customers are there. You just need to go out and get them. Easier said than done, of course. This is what we call a vertical marketing strategy.

Things you need to consider here are:

  • Value proposition — why should customers should choose you? Do you have any special competitive features?
  • Pricing model — Is your offering going to be more affordable, or offer more value? Perhaps, flexible pricing options like the freemium (free trial) model to entice customers?

Even if you don’t have such an innovative solution per se, you can make a difference with disruptive pricing or features. You need to make the difference, be it a competitive feature-set or the exact opposite: a simplified solution that makes your customers’ life easier.


  • Competitive research — You need to find out all about your competitors, in as much detail as possible, and make your product and your company noticeable/visible. This tactic defines a carefully aggressive marketing strategy
  • Brand awareness — You need to focus on your product’s/company’s vision, and showing that to the world. Your potential customers are not familiar with you or your product.

New Market – being the new kid on the block

Creating or entering a new market can be a thrilling experience. It can also be a devastatingly disappointing one. The key is establishing a good product-market-fit. If you do this, you can be a market leader (not necessarily first-to-market) and grow quickly. But — and this is a big “but” — the product-market fit concept is not one to be taken lightly.

On one hand, at this stage, you have no competitors (at least in theory). However, customer preferences remain somewhat of a mystery. Thus, triggering mainstream adoption is a big challenge. Yes, you may get some early adopters who sign up as customers. However, these “early gifts from the Gods” who get your hopes up, will soon disappear or “run out”. This will bring a drop in sales before any future — or non-existent — mainstream adoption.

Your priority, as a startup, is convincing those potential customers that your product or service holds real value for them. And finding that large set of potential customers is an important hypothesis to validate. You may initially need a large cash outlay so, as Steve Blank says,

“Managing burn rate becomes a critical activity. The biggest risk in this type of market is adoption; competition comes from non-consumption and other startups. Positioning is focused on communicating your vision and passion about the change your want to make.”

The key questions you need to focus on here are:

  • Which existing markets can provide a source of customers
  • What needs and/or features will your product offer?
  • How will you invoke demand?
  • How will you educate your market segments and how much will you spend on these activities?
  • What barriers are there for a potential competitor moving in on your turf?

Re-segmented Markets

Low-cost re-segmentation

To quote Blank once more, this market is Clayton Christensen’s classic disruptive innovation strategy. It involves finding a large group of under-served customers, who are willing to pay for a “good enough” solution. If done successfully, the disruptive innovator will find the higher cost competitors willingly moving upmarket, to find higher profits; in other words, the “cheap and cheerful” option. Positioning for re-segmentation involves talking about about value and customer needs.

Questions you need to answer? How about these:

  • Which markets will your customers hop over from?
  • What needs and pain-points define those customers?
  • How come the competition isn’t already offering what you are?
  • How long will the “education period” take?
  • What are your market-share goals?

Niche re-segmentation

This is the opposite of the “cheap and cheerful” competitive option. This time around, you’re going for the “never settle” crowd. In niche re-segmentation, the aim is to convince the upper echelon customers that the unique feature or characteristic of your shiny new product is so good, it’s time for them to change the rules and pay more for “the best”. You’re going after the most profitable customers, of course. The questions you’ll need to ask yourself are the same as those aforementioned for the low-cost re-segmentation, but the answers will be different.

Clone Market – attack of the clones

Entering a clone market, that is, introducing a successful business model from one location to another, by copying and pasting it, can be very successful. In this case, you just need to make sure you take into account the local factor. And by that I mean culture, habits, lifestyle, government regulations etc.

Essentially, you are migrating something that has worked successfully in one place, somewhere else, in the hope/belief it will work for this new location. Don’t get caught into the vicious cycle of going for a particular segment, instead of the money. For example, you may have segmented a large customer base that aligns with your strategy in this new location. But, if that segment does not have the buying power for your product, you will bump against some problems.

The Starttech target market segment

As we’ve mentioned explicitly in the past, on this blog, our target market segment is pretty specific. And that is for a number of reasons. You can read more about that here. Plenty of homework, as well as some trial and error experiments, went into defining it.

Above all, know; Know where you’re going

The big mistake many startups make before they have even launched their MVP or prototype product, is that they do not really know where they are going. It’s a case of “that romantic view” where the journey is more important than the destination.

Rest assures, in this case, it could not be further from the truth. If you want to launch a successful business and see it scale the heights, you must do the necessary groundwork. And most of that groundwork involves identifying your startup market type and doing your research for it.

And if you don’t do this, then you will still be going somewhere. It’s usually a place called “nowhere”. And you’ll get there very quickly.


Graham Wood Graham Wood

The Starttech Ventures Storyteller. Studied Journalism with Business at the University of Central Lancashire. Has worked in various product marketing management positions for the likes of Nokia, Samsung and Vodafone, as well as in several journalism and media roles since 2000.