market-mapping

name	market-mapping
description	When the user wants to map the competitive landscape, understand where profit concentrates, identify white space, or size the opportunity. Use when PMC says "map the market for X", "who are the real competitors", "who should I be targeting", "where's the money in X space", "competitive landscape", "customer segments for X", "profit pool", or "who's winning and why."
allowed-tools	["Read","Write","WebSearch","WebFetch","AskUserQuestion"]

Market Mapping

Module 02 of the McKinsey Strategy OS. Maps who's in the space, where profit concentrates, and who the real customers are — before committing to a position.

Market Mapping Philosophy

Three principles that distinguish useful market maps from noise:

Profit ≠ revenue. The largest player by revenue is often not extracting the most margin. Map where profit sits — that's where power lives.

Incumbents ≠ real competition. Your real competitors are whoever your best customers would choose if you didn't exist — not whoever has the biggest marketing budget.

Segment by behavior, not demographics. "SMB marketing teams" is a demographic. "Teams who currently manage 3+ agencies and spend 20h/week on reporting" is a behavioral segment. Behavioral segments have homogeneous pain and willingness to pay. Demographic segments do not.

Player Categories

Build a 3-5 category landscape. Every player belongs in exactly one tier.

Tier 1 Incumbents — market leaders; they define the rules, the pricing norms, and the default buyer expectation. Likely losing at the edges but dominant in the core.

Tier 2 Challengers — aggressive growers; they define the disruption vector. Where incumbents are slow, challengers are fast. Where incumbents are expensive, challengers are cheap. Watch what they're building.

Adjacent Players — different business model, same customer pain. Often not on the incumbent's radar but competing for the same budget line. The most underestimated threat category.

Emerging Threats — pre-product or very early, but signal where value is shifting. Follow the venture money and the conference talk titles.

For each category: name 2-3 representative players, their business model in one line, and what they're optimizing for.

Profit Pool Analysis

Trace where margin actually sits in the value chain:

1. Identify every role in the value chain (supplier → builder → distributor → customer success → end user)
2. Estimate gross margin at each stage (use public comps, 10-K filings, or proxy signals)
3. Find the stage where margin concentrates — that's where bargaining power lives
4. Distinguish: who creates value vs who extracts value

Proxy signals when hard data is unavailable:

• Fundraising multiples (high multiples → investors believe margin is there)
• Pricing power (can they raise prices without losing customers?)
• Customer acquisition cost relative to LTV
• Churn rate (low churn → value delivered, not just locked in)

The question to answer: "If I had to pick one position in this value chain to own, which has the most defensible margin?"

Customer Segmentation

Segment by three axes, not one:

• Pain intensity — how much does this hurt, measured in money or time lost per month?
• Willingness to pay — what budget exists, and who controls it?
• Reachability — how do you get to them, and how expensive is that motion?

The segment worth targeting: highest pain × WTP × reachability — not the biggest TAM slice.

Common segmentation mistakes:

• Using demographics when behavior is available
• Treating "enterprise" and "SMB" as segments (they're sizes, not segments)
• Confusing willingness to pay with ability to pay (budget ≠ urgency)

White Space Detection

White space = a gap where:

• Pain is high (people are actively complaining, paying for workarounds, or stuck)
• Solutions are weak (incumbent tools are 10+ years old, complex, expensive, or built for a different buyer)
• No dominant player has locked in the segment (no clear market leader with strong retention)

White space is specific enough to build a product thesis against: "Agencies with 5-20 employees who manage paid social for e-commerce clients — no one has built a reporting tool specifically for this workflow."

Output Structure

Every market map delivers:

1. Market map — 3-5 player categories with brief characterization (model + optimization vector)
2. Competitive moves to watch — the 1-2 strongest players' next likely moves
3. Target segment — defined by pain + WTP + reachability, not just size
4. Profit concentration — where in the value chain margin sits and why
5. White space — the specific gap, specific enough to anchor a product thesis

Quality Bar

• Player categories describe behavior and business model, not just company names
• Profit pool is distinct from revenue map — margin concentration identified
• Target segment defined by pain + WTP + reachability, not demographics alone
• White space is specific enough to build a product thesis against it

Common Rationalizations

Rationalization	Reality
"Our market is too new to map"	Map what exists adjacent. New markets are undefended segments of old markets — find the adjacent segment and describe the migration.
"All segments look attractive"	They don't. Apply the pain × WTP × reachability filter. If multiple segments still look equal, you need more data on one of the three axes.
"We compete with everyone"	No. Name the 2-3 players your best customers would choose if you didn't exist. That's your real competitive set.
"Profit pool analysis requires data we don't have"	Use proxy signals: fundraising multiples, pricing power, CAC vs LTV ratios, churn rates. Pattern-match from comparables.