What is monopsony market?

Is product differentiation of any kind not in itself market resegmentation? If different, what are some practical examples?

• I read in a book "A re-segmentation strategy is based on the startup’s market and customer knowledge, ideally identifying a market opportunity that incumbents are missing, which usually takes one of two forms: a low-cost strategy or a niche strategy. (Unlike differentiation, segmentation forges a distinct spot in customers’ minds that is unique, valuable, and in demand.)" I find it hard differentiating between an existing market and a resegmented market. Any startup looking to enter into an existing market in my own opinion, has a resegmentation strategy in place. An attempt to differentiate between an existing market and resegmented could be that people entering an existing market employ a product differentiation strategy while those entering a resegmented market employ a resegmentation strategy. Is the goal of differentiating your product not  always to create a new kind market that responds to the differences your are offering?

• Answer:

  To me, product differentiation and resegmentation is two different alternative marketing strategies. But first, let's try to get a lil more clarity on the existing market versus resegmented market entry strategy. In general, the route to enter existing market is "10X faster/better" route (e.g. Facebook over MySpace). So - clearly product differentiation is the key dimension to enter an existing market. But not the only dimension. While resegmented market is a subset or a niche of an existing market. You either enter as a low cost player like Acer did in the overcrowded PC market. Or you apply a focused approach to solve the problems within a niche e.g. AirBnB, StubHub, Etsy and others going up against pieces of Craiglist.  The marketing concept applied with resegmentation is, if you solve a straight forward problem -- brand building becomes much easier. See AirBnB. ------------------------------------- Is the goal of differentiating your product not always to create a new kind market that responds to the differences your are offering? No. You do NOT create a new market by differentiating our product/startup. The market is already there -- which why you decided to apply resegmentation strategy in the first place to enter the market. Let's dig a lil deeper to explain that. With resegmentation, you try to answer two questions 1) What is my competition? 2) What's my strategic position? There are many ways to represent your startup's strategic position. To keep it simple, see http://www.scribd.com/doc/6924285/Michael-Porter-Competitive-Strategy. Porter's model says that a venture can adopt one of two alternative generic strategies: i) Low-cost leadership ii) Differentiation. These two options give rise to four possible strategic positions that determine how a venture can gain and sustain competitive advantage, as shown on the illustration below. While on the other hand, differentiation happens at four dimensions of: i) product offering ii) customer connection iii) business model and iv) availability. Best companies sustainably out-pace ther competition in more than one dimension, or else, really dominate in the one dimension that is most important in their category. In the illustration above, the oval represents Acer's resegmented strategy which reinvented the cost advantages to create distribution (availability) advantage. Have all that said, product differentiation today is less and less about rational features and more and more about intangibles. Products that are well differentiated make us FEEL something.