Domain 2 of 6

Choosing Where to Compete

The first choice a strategy makes. Defining the market, sizing it without fooling anybody, choosing the segment to win, reading the competitive forces in it and telling a real advantage from a feature somebody can copy by Friday.

Concepts

~20%

Of the exam

Practice questions

Concepts in this domain

01Market definitionDrawing the boundary around the buyers a product is for, why a product category and an industry both put that boundary in the wrong place, and the arithmetic that decides whether the group inside it is large enough for the business the product has to become.02Market sizingHow to size a market with TAM, SAM and SOM, why the top down and the bottom up calculation have to reconcile before either is quoted, and the four failure modes that make a market size collapse under the first question.03Market segmentationHow to cut a market into groups that behave differently, which segmentation bases predict behaviour and which only look tidy in a spreadsheet, the four tests a segmentation has to pass and how a beachhead segment gets chosen.04Competitive analysisPorter's five forces applied to a single product, the two competitors most analyses leave out, how to run the exercise without it becoming a research project and what the output has to be able to settle.05Competitive advantageWhat separates a real competitive advantage from a feature with a head start, where durable advantages actually come from, how long each kind survives a funded rival and what to do when a product honestly has none yet.06Moats and switching costsWhat keeps a competitive advantage once a rival has noticed it. Network effects, switching costs, scale economies, proprietary data and brand, what erodes each one, and the argument that learning speed is becoming the moat that matters.

Try a question from this domain

A firm building compliance software describes its market as every organisation that could conceivably benefit from better record keeping. Why can that sentence not carry a plan?

AIt is too narrow, since organisations that already keep good records also benefit from better tools.
BIt names a problem where it should have named a product category, which is the wrong way round.
CIt is a capability statement, and a market has to be one somebody can name, count, reach and describe the buying behaviour of.
DIt leaves out the price, which is the figure any plan ultimately rests on.

18 questions on this domain.

One per page, with a worked explanation.

Start the set