A new product entering an existing market with a sustainable,dramatically lower price,not only takes market share from incumbents,but expands the size of the market by selling to price-sensitive customers who otherwise do not purchase from anyone.Either customers will stop using a competitors’ product and use yours because of significant cost savings or they will simply start using yours because they could not afford to use your competitors’.

Similarly,a new product entering an existing market with unique functionality targeted at a specific user class,not only takes market share from incumbents,but expands the size of the market by selling to new customers brought to the market by the new functionality.Either customers will stop using a competitors’ product and use yours because your functionality better matches their needs,or you will acquire new users because existing products never adequately fit their needs.

The toughest distinction to make is whether your product represents a new market,or is re-segmenting an existing market.There is a tendency for startup entrepreneurs to believe that they have a new product for a new market,though this is rarely that case.It can be argued that most technological advances either lower costs or enable new functionality that improves problem resolution within existing markets.True market disruption often requires major technology innovation or uses existing technology in a new and unforeseen way.Most likely,you are re-segmenting a market.