Three Tiers of Non-Customers
Blue Ocean Strategy's tool for looking past your current customers to the people not buying from anyone in your industry, in three rings of increasing distance from your market.
Rings spread outward from your market, three of them, each layer further from the customers you already have.
Reach for this when…
- Growth has stalled because you're fighting the same customers as every competitor.
- You suspect the real market is bigger than the one you're competing in.
- You want to find new demand instead of a bigger share of existing demand.
How to run it
- Map Tier 1: soon-to-be non-customers - people who buy minimally and would leave at the first better offer.
- Map Tier 2: refusing non-customers - people who've consciously chosen not to use your industry's offerings at all.
- Map Tier 3: unexplored non-customers - people in adjacent markets whose needs your industry has never addressed.
- For each tier, ask what's stopping them, not what they think of your product specifically.
- Redesign the offer to pull the biggest reachable tier across the line.
A worked example
Situation. Kim Min-ho ran Sinseon Dairy, a dairy delivery business in Busan, South Korea, competing hard for the same middle-class households every rival was also chasing.
Applied. Using the three tiers, he found Tier 2 refusing non-customers - small food stalls that had already weighed up his delivery service and turned it down, buying milk daily from informal traders instead because no delivery service offered the small, cash-friendly quantities they needed.
Result. He built a stripped-down stall pack sized for street vendors. Within a year that segment was a third of his volume, won back from informal traders who'd been quietly meeting a need his own industry had refused to serve.
The catch
The tiers are a prompt for imagination, not a market-sizing method - you still have to go and validate that a tier's needs are real and reachable. It also works better in mature, contested categories; in genuinely new categories there's no 'industry' boundary to look outside of yet.
If your Tier 3 idea would require becoming a different business, you've found a new venture, not a tweak to this one.
Origin: W. Chan Kim & Renee Mauborgne