MKT5610 Chap.3 Reconstructing Market Boundaries
Reconstructing Market Boundaries
Six principles, each paired with the risk it lowers
The teaching material sets out four principles for formulating a strategy and two for executing it, and pairs each with a named risk. Reconstructing market boundaries lowers search risk. Focusing on the big picture rather than the numbers lowers planning risk. Reaching beyond existing demand lowers scale risk.
Getting the strategic sequence right lowers business model risk. On the execution side, overcoming organisational hurdles and building execution into strategy lower organisational and management risk.
Each principle is an answer to a specific way that a new idea usually fails.
Six paths, and only two are usually live
The paths look across alternative industries, across strategic groups, along the chain of buyers, across complementary offerings, across functional and emotional appeal, and across time. They are not a checklist to work through in order.
Each asks a different question, and for any given business most of them return nothing.
The four actions, and why an empty left column is a warning
Which factors should be eliminated, which reduced well below the standard, which raised well above it, and which created that the industry has never offered.
The discipline is in the first two verbs, because a grid that only adds describes a more expensive version of the same product.
What this chapter covers
- 01
Six principles and the risk factor each one lowers
- 02
The six paths, and the boundary each crosses
- 03
Substitutes and alternatives as the basis of the first path
- 04
The chain of buyers, and moving an industry's attention along it
- 05
The strategy canvas, and reading a value curve as a shape
- 06
Eliminate, reduce, raise and create, and why cost saving comes from the left
- 07
Three tiers of non-customers, and which to work outward from
- 08
Four sequential gates: buyer utility, price, cost and adoption
- 09
The buyer experience cycle and the six utility levers
Fill a four actions grid so that it funds itself
- 3Name what to eliminate and what to reduce, with the saving each buys.
- 2Name what to raise, against the buyer's real constraint.
- 3Create a factor from outside the industry.
- 2Say why a rival cannot copy it quickly.
Key terms
- Search Risk
- The risk of looking for new demand in the wrong place, which is what reconstructing market boundaries is meant to lower. It is the first of the six risks because everything downstream inherits it.
- Strategy Canvas
- A display of competing factors with each player's value curve drawn across them. Its purpose is to make a profile's shape visible, since a curve above a rival at every point describes a bigger budget rather than a different strategy.
- Four Actions Framework
- The set of questions asking which factors to eliminate, reduce, raise and create. Two of the four verbs lower cost and two raise value, which is what allows a genuine answer to fund itself.
- Chain of Buyers
- The purchasers, users and influencers involved in one purchase decision. Industries settle on serving one of the three, leaving the other two unaddressed by every competitor at once.
- First-Tier Non-Customer
- Someone on the edge of a market who uses it minimally while waiting to leave. They are the cheapest to convert and give the most reliable reasons, because they have direct experience of what is wrong.
- Buyer Experience Cycle
- The six stages a buyer passes through: purchase, delivery, use, supplements, maintenance and disposal. Blocks to utility cluster in the stages an industry has never examined.
- Utility Lever
- One of six ways an offering can improve an experience stage: customer productivity, simplicity, convenience, risk, fun and image, or environmental friendliness.
- Pioneer
- A business offering unprecedented value with a mass following, as distinct from a settler whose curve conforms to the industry shape and a migrator that extends the curve without altering it.
Reconstructing Market Boundaries FAQ
Do I have to work through all six paths for every business?
No, and trying to is the common way the tool wastes an afternoon. Each path asks a different question and most return nothing for any given business. Two are usually live. The productive approach is to read the six, notice which one makes you think of something specific about your own case, and pursue that one properly rather than producing a shallow paragraph against each heading.
What is the difference between this and simply improving the product?
Improving the product raises your score on factors the industry already competes on, which your rivals are also doing and which costs more each year. Boundary work changes which factors are on the list, by removing some the industry takes for granted and adding one it has never offered.
The test is the four actions grid: if your entries are all in the raise and create columns, you have described a better and more expensive version of the same thing.
Why does the sequence put cost after price rather than before it?
Because it makes the price a strategic choice with a cost target underneath it, instead of a cost with a margin added on top. Buyer utility is tested first, then whether the price is accessible to the mass of buyers the idea needs, then whether the cost target can be met at that price, then whether adoption hurdles are being addressed up front.
A no at any gate sends you back to rethink the offering rather than forward to compensate.
Is finer segmentation compatible with reaching beyond existing demand?
The material treats them as opposed moves, and the opposition is real. Reaching beyond existing demand means looking at non-customers rather than customers, and building on the commonalities in what buyers value rather than on the differences between them. Tailoring raises cost and shrinks each addressable group. Both approaches are legitimate; what is not legitimate is claiming to do the second while actually doing the first.
Assessment move
Draw your own group's idea as a value curve against the two closest existing options, using six factors you choose. If your curve is above theirs everywhere, you have a more expensive product rather than a different one, and the grid is the place to fix that before any money is spent. Then walk the six experience stages once and note which annoys a buyer most.
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