# New Market Entry Risk Model

Evaluate whether to enter a new market or launch a new product line using a structured risk model covering demand validation, cost of entry, and reversibility.

## Prompt

Act as a corporate strategy advisor evaluating a market entry decision. Here is what I'm considering:
{{market_entry_description}}

Evaluate this using the following model:

1. Demand validation strength — assess how strong the current evidence of demand actually is (e.g. verified customer requests vs. assumed demand vs. a competitor's success), and rate confidence as High/Medium/Low.
2. True cost of entry — beyond the obvious costs mentioned, identify 2-3 likely hidden costs (e.g. required certifications, channel conflict with existing product lines, cannibalization of current revenue).
3. Competitive response — describe how the most likely competitor(s) would realistically respond if this entry succeeds, and whether that response would meaningfully threaten the opportunity.
4. Reversibility and sunk-cost exposure — assess how much this commits the company (financially and reputationally) if it fails, and at what point a failure would become obvious enough to cut losses.
5. Minimum viable test — propose the smallest, cheapest possible test that would meaningfully validate or invalidate the core assumption before committing to a full launch.
6. Go/no-go recommendation — give a clear recommendation (Go, No-Go, or Test First) with the single strongest reason behind it.

Be direct and avoid hedging in the final recommendation.

## Best for

Founders, executives, and product leaders evaluating whether to enter a new market, launch a new product line, or make a significant strategic bet, who want a rigorous framework rather than optimism-driven analysis.

## Compatible tools

- Claude
- ChatGPT

## How to use

- Describe the market opportunity, your current evidence for it, and your company's context in {{market_entry_description}}.
- Pay particular attention to the demand validation strength rating — many market entry failures stem from mistaking weak signals for strong demand.
- Use the minimum viable test recommendation as your actual next step rather than jumping straight to a full commitment.
- Revisit the reversibility assessment honestly before proceeding — if the answer reveals high, hard-to-reverse exposure, weight the decision accordingly.

## Customization tips

- If you have real data (survey results, waitlist signups, pilot program results), include the specifics so the demand validation assessment is grounded rather than generic.
- Ask for a version of this analysis formatted for a board or investor presentation if the decision requires external buy-in.
- Follow up by asking for a detailed design of the minimum viable test recommended in step 5.

## Example input

Act as a corporate strategy advisor... Market entry: our B2B software company (project management tool) is considering launching a new B2C personal productivity app version, based on a few customers mentioning they'd like a personal version, and a competitor recently having B2C success.

## Example output

1. Demand validation strength: Low-to-Medium confidence — the evidence is a handful of informal customer mentions and a competitor's success in an adjacent but distinct market (B2C vs your core B2B), not verified demand from your actual target users for a personal-use product.
2. True cost of entry: (a) B2C requires an entirely different acquisition motion (paid consumer marketing, app store optimization) that your team has no established expertise in, (b) supporting a B2C product likely creates internal focus/resourcing conflict with your core B2B roadmap, (c) B2C customer support volume and expectations differ significantly from B2B and may require new support infrastructure.
3. Competitive response: your core B2B competitors are unlikely to respond directly since this move doesn't threaten their business; the real competitive risk is from established B2C productivity apps that already have strong brand recognition and lower customer acquisition costs than you'd achieve as a new entrant.
4. Reversibility and sunk-cost exposure: moderate — the financial exposure is manageable if scoped as a small team, but reputational exposure exists if it distracts from and visibly slows your core B2B roadmap; failure would likely become obvious within 2-3 quarters via poor consumer acquisition metrics, at which point cutting losses should be straightforward if scoped small.
5. Minimum viable test: rather than building a full B2C app, test the core assumption by offering a simplified 'personal' tier within your existing product to your current customer base, measuring actual adoption and willingness to pay before any separate B2C build.
6. Go/no-go recommendation: Test First — the demand evidence is too weak and the cost/focus trade-off too real to justify a full B2C build; validate with the minimum viable test above before committing further resources.