Once we created an Edutainment product on CD. We had a large addressable market. Any English speaking computer user could use our product and have fun with it – a child, teenager, adult, student, teacher …
We showed the product to some bookstore chains & websites. They agreed the product was worth the shelf space – and our product got on the shelves of many stores in many cities
In the first week, each store sold only a few pieces. So, we started some ads. Some bookstores did in-store promotions. However, things didn’t improve much. So, we cut the price – sales still didn’t budge.
The problem was – children couldn’t even find it in their section. Teenagers thought it was too purposeful. Adults thought it was too playful. Students & teachers couldn’t map it to a curriculum to find it useful
We wanted to advertise more. But we couldn’t tell which customer group would respond. So we continued to advertise to everyone. The ads used up a lot more money than it brought in. Eventually, we ran out of money.
Contrast this with another venture that started with one specific customer – a hospital that needed a certain machine. We got them the machine from another country. Then we found them a viable service agreement, and created a lease plan that worked for them. We won our first customer
In the next few months, that hospital leased more machines from us. Then, a nearby hospital with similar needs leased a machine from us. Then we made similar deals with similar hospitals.
In the first case, we had a large addressable market of people who could buy, but didn’t know anyone who would buy. In the second case, we knew one customer who would buy and then found customers like that.
The point is, till you can name a few customers who will buy, estimating a large market size of customers who could buy is just wishful thinking.