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New Enterprises · Lecture 7 of 12 · 2:11

Lecture 7: What is a Beachhead Market

What is a Beachhead Market on YouTube

Study guide

What this lecture covers

Following the lecture on market segmentation, this one explains the next step: choosing a single beachhead market to focus on from the shortlist of candidate markets. It explains the military metaphor behind the term and why founders with limited resources should optimize for winnability rather than size.

After watching, you should understand what makes a market a good beachhead and be able to apply the concept when narrowing down your own list of target markets.

Key ideas

  • Limited resources: entrepreneurs have limited money, time, and human capital, so they must focus rather than spread thin.
  • Beachhead market: the one market chosen from the shortlist to attack first, not necessarily the largest one.
  • Military metaphor: like landing on a beach in a military operation, the market must be capturable and large enough to build a base, then used to expand into further markets.
  • Ease of capture over size: the beachhead should be the lowest-hanging fruit, not the biggest opportunity.
  • Big enough to matter: it still needs to be large enough to generate cash flow and critical mass for expansion.

Before you watch

  • Watch "How to Do Market Segmentation" first, since this lecture picks up directly from the shortlist of six to eight markets it produces.

Check your understanding

  1. Why does Aulet argue against choosing the biggest possible market as your beachhead?
  2. What two conditions does a beachhead market need to satisfy, according to the military metaphor?
  3. How does limited founder resources shape the reasoning behind choosing a beachhead market?
  4. What comes after successfully capturing a beachhead market?

Vocabulary

beachhead market (noun)
The first, most winnable market a startup targets before expanding further.
Choosing the right beachhead market focuses limited resources effectively.
shortlist (noun)
A small selected group chosen from a much larger list of options.
The beachhead is picked from the shortlist of candidate markets.
human capital (noun)
The skills, knowledge, and time that people bring to a business.
A startup has limited human capital compared to a large company.
military metaphor (noun)
A comparison that borrows language and ideas from warfare to explain a strategy.
The beachhead concept is a military metaphor for market entry.
capturable (adjective)
Able to be won or taken successfully.
A good beachhead market must be genuinely capturable with limited resources.
critical mass (noun)
The minimum size or scale needed for something to sustain itself and grow.
The beachhead market must be big enough to reach critical mass.
lowest-hanging fruit (phrase)
The easiest opportunity to achieve or obtain.
A beachhead market should be the lowest-hanging fruit, not the biggest prize.
expand (verb)
To grow larger or extend into new areas.
After winning the beachhead, the company can expand into new markets.
winnability (noun)
How likely something is to be successfully won or achieved.
Winnability matters more than raw size when choosing a first market.
resources (noun)
Money, time, people, or tools available to get something done.
Startups must use their limited resources wisely.
focus (verb)
To concentrate effort and attention on one specific thing.
Founders need to focus on a single beachhead market first.
opportunity (noun)
A favorable chance to achieve success or growth.
The biggest market opportunity isn't always the right first choice.
optimize (verb)
To make the best or most effective use of something.
You should optimize for a market you can actually win.
base (noun)
A secure starting point from which to grow further.
The beachhead market becomes a base for future expansion.
cash flow (noun)
The movement of money into and out of a business.
The beachhead market must generate real cash flow.
narrow down (phrasal verb)
To reduce a large list of options to a smaller, more focused set.
Founders narrow down their market list to find the best beachhead.
attack (verb)
To pursue or target something aggressively.
A startup should attack its beachhead market with full focus.
landing (noun)
The act of arriving at and taking hold of a place.
The beachhead metaphor compares market entry to a military landing.
capture (a market) (verb)
To successfully win and hold a market or customer group.
The goal is to capture the beachhead market fully before expanding.
spread thin (phrase)
To divide limited resources across too many things at once.
Founders shouldn't spread thin by chasing too many markets at first.

Chapters

From the YouTube description

MIT 15.390 New Enterprises, Fall 2013
View the complete course: http://ocw.mit.edu/15-390F13
Instructor: Bill Aulet

Description of the concept of the beachhead market and its importance and place in the entrepreneurial journey.

License: Creative Commons BY-NC-SA
More information at http://ocw.mit.edu/terms
More courses at http://ocw.mit.edu

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