Market Creation Strategy: Meaning | Types | Examples

A market creation strategy involves developing and introducing a new product or service into an area with no existing market. This strategy differs from market penetration, where a company enters an existing market with new or existing products. Critical aspects of a market creation strategy include:

1. Innovation: The product or service often offers something significantly different from what is currently available. This could be a technological breakthrough, a unique application of existing technology, or a novel approach to a common problem.
2. Education and Awareness: Since the market is new, a significant part of the strategy involves educating potential customers about the product or service. This requires effective communication to explain the benefits and uses of the new offering.
3. Identifying or Creating Demand: Companies need to either identify a latent need that consumers are unaware of or create a demand for their new product or service. This often involves understanding and leveraging consumer behaviors, preferences, and unmet needs.
4. Risk Management: Entering a new market comes with high risks, as consumer acceptance and demand are uncertain. Companies need to have robust risk management strategies to deal with potential challenges.
5. Adaptability and Flexibility: As the new product or service market is developed, the company must be prepared to adapt and refine its offering in response to customer feedback and changing market conditions.
6. Distribution and Accessibility: Establishing effective channels for distribution and ensuring the accessibility of the product or service to the target audience are crucial.

Types of Market Creation Strategy

Market creation strategies can be categorized into different types, each with its approach and focus. Here are some of the key types:

1. Blue Ocean Strategy: This involves creating a new market space (“blue ocean”) where there is no competition, as opposed to competing in an existing market (“red ocean”). It focuses on innovation to create new demand and make the competition irrelevant. This could involve developing new products or services or significantly redefining existing ones to create a unique market. Blue Ocean Strategy: Meaning | Types | Examples | Challenges
2. Disruptive Innovation: This strategy involves introducing a product or service that disrupts an existing market by providing a more straightforward, cheaper, or convenient alternative. These innovations often target a small, less demanding customer base, but eventually, they move upmarket and disrupt established competitors.
3. Niche Market Creation: This strategy focuses on identifying or creating a niche market that existing products or services have not served. It involves tailoring a specific product or service to meet a targeted customer’s unique needs.
4. Diversification: In this strategy, a company enters an entirely new market by developing or acquiring new products unrelated to its current products or market. This could be a way to create a new market if the diversification leads to the development of a unique product or service category. What is a diversification strategy | Explained with Types
5. Value Innovation: This involves creating new value for customers by offering products or services that are both differentiated and low-cost. This strategy aims to break the trade-off between differentiation and low cost, creating a leap in value for both the company and its customers.
6. Segmentation: This approach involves identifying underserved or unaddressed segments within a broader market and creating products or services specifically designed for them. This could create a new market if the segmentation is based on unmet needs significantly different from the existing market.
7. Customer Co-creation: This strategy involves engaging customers directly in creating new products or services. By involving customers in the development process, companies can develop products that are closely aligned with customer needs and preferences, potentially leading to the creation of new markets.

Each strategy requires a different approach to market research, product development, marketing, and sales. The choice of strategy often depends on the company’s strengths, resources, and the nature of the opportunity it has identified.

Examples of Market Creation Strategy

Various companies across different industries have successfully implemented market creation strategies. Here are some notable examples:

1. Apple and the iPhone (Disruptive Innovation/Blue Ocean Strategy): Apple created a new market for smartphones with the launch of the iPhone in 2007. The iPhone combined a phone, an iPod, and an internet communicator into one device, creating a new category in the mobile phone market. This innovation was not just a product improvement; it redefined the market.
2. Netflix (Blue Ocean Strategy/Value Innovation): Originally a DVD rental service, Netflix pivoted to online streaming, creating a new market for on-demand entertainment. They offered a large, continuously updated content library for a low monthly subscription fee, vastly different from traditional TV and movie rental services.
3. Tesla (Disruptive Innovation/Niche Market Creation): Tesla entered the automotive market with high-performance electric vehicles (EVs). Initially, they targeted a niche market of environmentally-conscious and technology-savvy consumers, gradually expanding to a broader market and, in the process, spurring the growth of the EV market.
4. Amazon Web Services (AWS) (Blue Ocean Strategy): Amazon identified a need for scalable, on-demand cloud computing services. AWS was launched to cater to this need, creating a new market for cloud infrastructure services. This was a significant departure from Amazon’s core e-commerce business.
5. Spotify (Disruptive Innovation/Value Innovation): Spotify revolutionized the music industry by offering a vast music library through a subscription-based streaming service. This model provided an alternative to music piracy and transformed how people access and listen to music.
6. GoPro (Niche Market Creation): GoPro created a new market for durable, portable, and easy-to-use cameras explicitly designed for action and adventure photography. Before GoPro, there was no significant market for such specialized cameras.
7. Impossible Foods and Beyond Meat (Blue Ocean Strategy/Niche Market Creation): These companies created a new market for plant-based meat substitutes that closely mimic the taste and texture of real meat. Targeting not just vegetarians and vegans but also meat-eaters, they introduced a new category in the food industry.
8. Dyson (Disruptive Innovation/Blue Ocean Strategy): Dyson transformed the vacuum cleaner market using cyclonic separation technology with its bagless vacuum cleaner. This innovation created a new segment in the home appliance market focused on high-efficiency and high-design products.

These examples demonstrate how companies can successfully create new markets or redefine existing ones through innovation, identifying unmet needs, and strategic positioning.