How many sides are there in your market? Are you a B2C? A B2B? A B2B2C (OEM)? Whoever and whatever you are, you need to keep in mind that there are at least two sides to your market, if not more.
When most people think “two-sided market” they think of a marketplace. eBay is a great example – it’s a company that caters to both buyers and sellers, different types of customers with different points of pain. eBay has a selling proposition for each side of the market and thus far has done a fantastic job. Unfortunately, most of us work under the assumption that the eBay model is the only two-sided market model.
But it’s not.
All of Apple’s products live in a two-sided market as well. Take the iPhone for example #1. Obviously, the primary customer is the consumer. The average Joe who wants a really cool cell phone with lots of options. That makes sense, but it’s not the end of the story. Apple isn’t a cell phone carrier, so they had to sell their value proposition around before finally landing the sale with AT&T.
Example #2 would be Apple’s line of (expensive) computers. Once again, the primary customer is the consumer. And once again, that’s not the end of the story. Apple is not a manufacturer. In fact, you find a small note on their products that says, “Manufactured for Apple.” In addition to selling their goods to consumers, Apple must sell their brand to a manufacturer. The end user has no idea who built their computer, but they know it’s branded with the characteristic Apple logo. In order to secure a quality vendor, Apple must offer a quality co-branding agreement in exchange.
Most of you are thinking, “but aren’t you talking about vendors? Isn’t Apple the customer in this case?”
Yes and no. In a post-Wal-Mart world, we’ve been trained to think that the purchaser has the power – particularly in a B2B situation. In many cases this is true, but discounting the selective power of the seller is a fatal mistake. In a B2B world, the seller can and will refuse service to other businesses. They don’t need the sale – there will always be another opportunity.
In Apple’s case, they are giving the consumer a computer in return for cash. They are giving the manufacturer use of their brand and its related equity in return for a computer. It makes Apple a pure marketing company – the middle man in an exchange between two sides of a market that never meet.
So if Apple, a self-proclaimed “consumer products company” is really living in a two-sided market, how many sides does your market have?