The content that follows was derived from a video by Alex Hormozi. The advice within it is not specific to any industry, but is nonetheless an interesting and useful lens to hold to a given industry or business, including those in the crypto space. For this reason, I’ve decided to turn what began as a set of personal notes into this article.
When starting a business and selling a product or service, how do you know you have a good market?
That is, what are the things you should be looking for to know you have a market worth going after?
The First Rule Of Thumb
As a rule of thumb, you should ask yourself: as long as a given market is not dying, and is stable or growing, then where can you provide the most value given your skill set?
If you have experience working with people within a specific marketplace, or have some inherent advantage there – especially by way of first-hand, personal experience – go after that market first, because you know the pains people/companies in that market have, and you will ultimately create a better product that will provide more value.
But – as might be the case if you’re reading this guide – many people have no experience in any market.
So, then, here are the four things that you should look for which deciding upon a market to target.
The Four Things To Look For In A Market
1. Pain
Is the market in pain?
That is, does the market have a desperate need for your product or service? A “nice to have” is not something that people are going to take their money out for and buy, especially in a bad economic environment.
Some things are timeless. Health, wealth, and relationships are the timeless needs of humanity. Are people sad and lonely (relationships)? Are people broke (wealth)? Are they feeling bad about how they look, and are they unhealthy (health)? These are three big areas of pain.
When looking at a potential market, should ask: is there key pain that you are solving?
2. Growth
Is the market growing? This one is pretty simple.
A newspaper company isn’t going to be doing well when the market for newspapers is shrinking.
You want the market you enter to be growing.
3. Easy to Find
Are your prospects easy to find?
If you’re marketing your product and cannot find your prospective customers to begin with, then you’re not going to be able to sell your product or service.
For example, if you’re marketing to plastic surgeons and the only people seeing your ads are nurses, then you’re not even going to be able to present your offer to plastic surgeons, let alone sell anything to them.
When picking a market, you want to find one that you can target easily, that has associations/groups/channels that people in the market congregate around. This way you can cast your line there, and then hook clients.
If you can’t find your customers and clients, they’ll never find you.
4. Purchasing Power
Do your potential customers have the money to spend?
In order to be successful in a market, your potential customers need to have purchasing power, plain and simple.
As an example of where there might not be purchasing power: if you’re going after unemployed people to coach them on how to compose their resumes presents a growing market with a lot of pain, and the customers are super easy to find, but these people probably won’t want to buy your stuff, because they don’t have jobs.
An Example Of This Framework In Use
Let’s take a quick look at how this four-part framework for a profitable market looks when applied.
Let’s say you are a relationship coach – you serve couples, and you’re good at helping people find love. You want to find a market that has all four of the attributes above. This means that instead of saying you’re going to help say, college kids find love, you would probably after seniors in their second half of life who would like to find their next partner.
Senior citizens looking for their next partner check the boxes of our framework.
Seniors have tons of pain because they’re alone.
Senior citizens present a growing market because people are dying and getting older every day.
Senior citizens are easy to find.
And senior citizens in general have far more money to spend than say, college students.
So, even though you have the same core value proposition when going after senior citizens as opposed to college kids, you’re choosing to serve a market that will probably make you much more money.
Let’s Recap!
When looking for a market, ask which market, above all else, you can provide the most value to. If you have personal experience in a market, that’s going to trump all else.
If you don’t have personal experience in a market and just have a skill (of being able to market or sell, for example), then look at your market in terms of the four attributes covered above.
You cannot have only three of the four attributes above. If you’re missing one, it kills the framework.
You can find a market that has tons of pain, purchasing power, and that’s easy to find, but that means little if the market is shrinking every year.
In the example of going after unemployed people as a market: they were growing as a market, in pain, easy to find, but didn’t have the purchasing power.
If you have a product for plastic surgeons but cannot find them and target them with ads, you won’t do well.
If your product is simply “nice to have” but people don’t truly need it, then not enough of them are going to buy it.
You want to make sure that your market has all four of the covered attributes. And ideally, you pick a market that you already know you can provide value to, and solve a problem within that meets all of the four criteria.
Alex Hormozi on The Key To Finding A Profitable Market
The content that follows was derived from a video by Alex Hormozi. The advice within it is not specific to any industry, but is nonetheless an interesting and useful lens to hold to a given industry or business, including those in the crypto space. For this reason, I’ve decided to turn what began as a set of personal notes into this article.
When starting a business and selling a product or service, how do you know you have a good market?
That is, what are the things you should be looking for to know you have a market worth going after?
The First Rule Of Thumb
As a rule of thumb, you should ask yourself: as long as a given market is not dying, and is stable or growing, then where can you provide the most value given your skill set?
If you have experience working with people within a specific marketplace, or have some inherent advantage there – especially by way of first-hand, personal experience – go after that market first, because you know the pains people/companies in that market have, and you will ultimately create a better product that will provide more value.
But – as might be the case if you’re reading this guide – many people have no experience in any market.
So, then, here are the four things that you should look for which deciding upon a market to target.
The Four Things To Look For In A Market
1. Pain
Is the market in pain?
That is, does the market have a desperate need for your product or service? A “nice to have” is not something that people are going to take their money out for and buy, especially in a bad economic environment.
Some things are timeless. Health, wealth, and relationships are the timeless needs of humanity. Are people sad and lonely (relationships)? Are people broke (wealth)? Are they feeling bad about how they look, and are they unhealthy (health)? These are three big areas of pain.
When looking at a potential market, should ask: is there key pain that you are solving?
2. Growth
Is the market growing? This one is pretty simple.
A newspaper company isn’t going to be doing well when the market for newspapers is shrinking.
You want the market you enter to be growing.
3. Easy to Find
Are your prospects easy to find?
If you’re marketing your product and cannot find your prospective customers to begin with, then you’re not going to be able to sell your product or service.
For example, if you’re marketing to plastic surgeons and the only people seeing your ads are nurses, then you’re not even going to be able to present your offer to plastic surgeons, let alone sell anything to them.
When picking a market, you want to find one that you can target easily, that has associations/groups/channels that people in the market congregate around. This way you can cast your line there, and then hook clients.
If you can’t find your customers and clients, they’ll never find you.
4. Purchasing Power
Do your potential customers have the money to spend?
In order to be successful in a market, your potential customers need to have purchasing power, plain and simple.
As an example of where there might not be purchasing power: if you’re going after unemployed people to coach them on how to compose their resumes presents a growing market with a lot of pain, and the customers are super easy to find, but these people probably won’t want to buy your stuff, because they don’t have jobs.
An Example Of This Framework In Use
Let’s take a quick look at how this four-part framework for a profitable market looks when applied.
Let’s say you are a relationship coach – you serve couples, and you’re good at helping people find love. You want to find a market that has all four of the attributes above. This means that instead of saying you’re going to help say, college kids find love, you would probably after seniors in their second half of life who would like to find their next partner.
Senior citizens looking for their next partner check the boxes of our framework.
So, even though you have the same core value proposition when going after senior citizens as opposed to college kids, you’re choosing to serve a market that will probably make you much more money.
Let’s Recap!
When looking for a market, ask which market, above all else, you can provide the most value to. If you have personal experience in a market, that’s going to trump all else.
If you don’t have personal experience in a market and just have a skill (of being able to market or sell, for example), then look at your market in terms of the four attributes covered above.
You cannot have only three of the four attributes above. If you’re missing one, it kills the framework.
You can find a market that has tons of pain, purchasing power, and that’s easy to find, but that means little if the market is shrinking every year.
In the example of going after unemployed people as a market: they were growing as a market, in pain, easy to find, but didn’t have the purchasing power.
If you have a product for plastic surgeons but cannot find them and target them with ads, you won’t do well.
If your product is simply “nice to have” but people don’t truly need it, then not enough of them are going to buy it.
You want to make sure that your market has all four of the covered attributes. And ideally, you pick a market that you already know you can provide value to, and solve a problem within that meets all of the four criteria.
Mirror @ VentureBrain