Buyer Models

This entry is part 4 of 9 in the series Making Startups Happen

Who you can sell to. Having selected your target audience in general terms, the next step is to define the specific needs of that market, and the value proposition that will motivate a purchase. You create a general picture of potential buyers, how much of a market they represent, how much it costs to penetrate that market, and the shape of the adoption curve.

Originally published 2000

The largest possible market — every individual on the planet. However, the market is very price sensitive, and it takes a lot of reaching out to penetrate the market. The acceptance curve tends to be a long, slow ramp. A technology can languish for years, and then suddenly rocket.
Still very large, though smaller — a subset of consumers. This can be a highly lucrative market, because it is not overly price-sensitive. As long as the price is within reason, professionals will pay for it, either because they need it to compete, because they can make more money with it, or because it makes life easier, so they make the same money in less time, or with less effort. The acceptance curve tends to ramp up very quickly, and then taper off as market saturation is reached. Marketing costs are still large, but they can be much more tightly targeted.
This sector supports the high-ticket items. If the purchase can be cost-justified, it can be sold. Typically requires a combination of advertising and sales efforts. Marketing costs therefore tend to be high, and decision cycles can in some cases be 8 or 9 months. The acceptance curve is therefore slowed by bureaucracy, but once the pump is primed, the long initial dry spell can be followed by high volume revenues.
A subset of corporations who are taking their journals online. This market is small enough to be tapped with a purely sales effort. As more and more corporations realize they are in the “publishing” business, this market will expand to include most corporations — especially those with large intranet communities they want to keep informed. However, there will always be a core of companies that make their living primarily as a result of their publications. That audience is one that can be targeted with a fairly pure sales effort, without requiring any advertising.

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