I often suggest to my MIT mentees that they map the ecology of their market: customers, competitors, vendors, media, and other stakeholders. This is particularly useful in determining potential partners. Who will benefit from your startup? What do you have to offer a partner? Too often founders think what’s in it for them when the secret to successful business development is figuring out what’s in it for the partner.
This diagram by Andrew Quint of The Absolute Sound is an excellent depiction of the the audio marketplace. He has put the customer – consumers, not audio professionals – in the center. But beyond that Andrew has segmented the consumer audio market into three major segments.
Hardware – amplifiers, speakers, turntables, etc. is at the top half of the diagram, with “software” or “content” in the bottom half. Note that music itself has three segments: record labels, streaming and download services, and musicians – in this case including live music.
Of course any such diagram can go beyond simple connections to color coding certain elements. For example, any media campaign would target Audiophile press, Online audiophile communities, and perhaps audio shows as well.
Ecology maps should be living documents, updated as your market as well as target customers and partners, may change.
By quantifying relevant sections of your market this type of diagram can help educate investors, advisors, potential hires, et al.
Most important when you present this type of depiction is to elucidate the dynamics amongst the players. For example, what is not shown is “merch” – merchandise sold at shows by musicians: cds, t-shirts, signed photos, etc. Merchandise has become an ever growing share of a musician’s income as revenue from recorded music continues to shrink. While at the same time streaming is rapidly surpassing CDs and downloads as consumers’ preferred method of music consumption.
And, of course, market dynamics vary by country or region. For example, in Japan CDs are still the music medium of choice.