The Four Steps to the Epiphany

A New Product Attempting to Resegment an Existing Market: Niche 

Niche resegmentation is slightly different.  It looks at an existing market and asks, “Would some part 

of this market buy a new product designed to address their specific needs?  Even if it cost more?  Or 

worse performance in an aspect of the product irrelevant to this niche.  Niche resegmentation 

attempts to convince customers that some characteristic of the new product is radical enough to 

change the rules and shape of an existing market.  Unlike low-cost resegmentation, niche goes after 

the core of an existing market’s profitable business. 

Both cases of resegmenting a market reframe how people think about the products within an 

existing market. In-n-Out Burger is a classic case of resegmenting an existing market. Who would 

have thought that a new fast food chain (now with 200 company owned stores) could be a successful 

entrant after McDonalds and Burger King owned the market? Yet In-n-Out succeeded by simply 

observing that the incumbent players had strayed from their original concept of a hamburger chain. 

By 2001 McDonald’s had over 55 menu items and not one of them tasted particularly great. In stark 

contrast, In-n-Out offered three items: all fresh, high quality and great tasting. They focused on the 

core fast food segment that wanted high quality hamburgers and nothing else.  

While resegmenting an existing market is the most common Market Type choice of new startups, 

it’s also the trickiest.  As a low-end resegmentation strategy, it needs a long-term product plan that 

uses low cost as market entry to eventual profitability and up-market growth.  As a niche 

resegmentation, this strategy faces entrenched competitors who will fiercely defend their profitable 

markets.  And both require adroit and agile positioning of how the new product redefines the market.