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Background: I have a web app idea in mind that I have started developing for fun. As I started seeing potential for revenue, I realized that a lot of other competitors have already started this product a few years ago, and have successfully raised funding. These competitors seem to be focused only in one market, when two or three can possibly benefit greatly from it. Most tech-savvy internet users already know this product exists, but average users have no idea that this is available to them. Most average users I have spoken to, mostly strangers, have loved the idea, and wanted to pay to use it already.

EDIT: It would be a low cost service, probably would charge $1 a month, but I legitimately see many millions of users in the other markets. I have spoken to about 30 people, out of which 25 are ready to sign up today for $1/month.

Here is my question: Is my competitors' lack of marketing to this group something I should try and take advantage of? With millions in funding, these competitors are barely startups, but, for whatever reason, have decided not to jump into other markets. Instead of beating them with a far superior product, I am wondering if marketing a similar product to a different niche is worth pursuing? What are the benefits/drawbacks of hitting this full-time?

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If the selling price is only $1 per month, there may not be room for much marketing. Ask yourself how you're going to pay for the distribution? This idea sounds very capital intensive, especially if you want millions of people using it. – frenchie Jul 18 '12 at 15:50
I agree, this is definitely worth thinking about more. If the customer acquisition cost is $12, I'm thinking it might be worth it. But, then again, it's difficult to tell the acquisition cost right now. – Jason Jul 18 '12 at 23:39
As a suggestion, if you think people are willing to pay $1, then a very high percentage of those buyers will also buy at $2. I'd start with $2/month; it could make your business model more viable. – frenchie Jul 19 '12 at 1:07
What if one competitor offers the service for free, but nobody knows it exists? Would $2 be pushing it then? – Jason Jul 24 '12 at 21:26
IMO, if people are willing to pay $1 then they're also willing to pay $2, and may be even $3. The question is whether or not they're willing to pay; as long as they're willing to pay and price is reasonable then you can charge for your app. – frenchie Jul 24 '12 at 21:36

2 Answers

up vote 2 down vote

The answer to your question largely depends on the situation in your specific market, but generally, this has been done before in other product categories.

For example, Intuit brought accounting software to the masses. Basecamp did the same for project management. These companies innovated by means of simplification and opened new markets for existing product categories.

Other strategies include merely repositioning an existing product, which means changing the product story and sometimes, the target market. For example, in some parts of Europe, Johnson & Johnson started selling baby shampoo to women, once they ran out of moms with babies. They did this by simply changing their advertising message ("If it's good for them, it's good for you too").

So depending on your situation, you probably intend to employ one of these strategies in some form or another, so the answer is definitely yes, especially if you already know people who will pay for it.

As for the fact that your competitors aren't doing anything about it, there are only two possible reasons for that - they don't know about the market you discovered, or it's simply not large enough for them to care.

Good luck!

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up vote 1 down vote

Without knowing more the best answer is maybe. Even with knowing more the answer might be maybe.

You might have a bonanza idea on your hands no one thought of before. Or you didn't look far enough, forward enough as others did to see the showstopping reason not to engage in the first place.

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