The biggest point this is missing - the cost of acquisition. If you sell your product to 0.1% of China, you'll have tonnes of revenue. If you have to send salesmen out to knock on half a billion doors to get that 0.1% to buy, your profits won't be so hot.<p>Or, you could buy adwords. You can try a "viral" strategy, which magnifies your acquisition (by a factor you can calculate - if 90% of your customers can sell to a friend, you get 1/(1-0.9) = 10X the acquisitions you'd get without the viral strategy), but it's not a holy grail unless every customer brings in <i>more</i> than 1 friend. Guess how often that happens?
The only thing I disagree with is the limiting mindset of who your addressable market is... A better formula would be deciding who you WANT your addressable market to be, and finding a way to reach them.<p>For example, a local cafe might appear to be limited by geography, but could just as easily build a reputation beyond their borders and become the Omaha Steaks of Coffee.<p>I think you subtly made the point that things like making your product and experience remarkable, will expand your addressable market, but I think it is important for businesses and startups to realize that "Their Market" could be by design, and doesn't have to limited to the apparent cards they were dealt.<p>In fact, any marketer worth their salt should be able to find any consumer or target market no matter how big or small, no matter where they are and no matter the barriers and limitations and find a way to engage them.
"Happy customers beat the crap out of any marketing team you could hire..."<p>You should beat the crap out of your marketing team if they aren't bringing you happy customers.
It's called market segmentation and is fundamental to most businesses. I say most businesses, because there are always cases of businesses that succeed because of dumb luck or just being in the right place at the right time.<p>The statement "Happy customers beat the crap out of any marketing team you could hire" is pretty ridiculous because it downplays the importance of great marketing, without which, most products will get ignored.
This is a great breakdown of the different markets that exist. I think it can even help in calculating "back of the envelope" numbers, because you know you need to, "drop some zeros" a lot of the time. Pricing is kinda glossed over. But isn't Freemuim disrupting some of the 'Age old formulas'?