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Chinese math and market share

by mel starrs on November 19, 2007

in Uncategorized

When calculating how big your market is and estimating how what proportion you need to win, have you ever made the mistake of announcing you only need to atract 1% of the market? BusinessPundit explains the mistake in using Chinese math:

If you need 100 clients to break even for the year, does it matter how large the potential market is? Probably not. If your potential market is 10,000,000, does that make it easier to get 100 clients than if your potential market was 200 clients? It depends. Probably not. First of all, you have to have something of value (which many startups don’t) and you have to be able to convince even one person why they need it (which many startups can’t) or your market size is irrelevant. You won’t even get 1 client. Secondly, it may be easier to market in the case where you need 100 out of 200 because it may be easier to identify your target audience if it is only 200 people. In that case you are probably in a niche that is easy to market to and don’t just have to blanket your ads on the general public.