# Market adjacency analysis
Use this method to identify where an organization can expand, where incumbents are vulnerable, and who may enter the core market from an adjacent position.
Read `references/host-operations.md` only when current external evidence must be collected. If research access is unavailable, use supplied evidence, identify coverage gaps, and do not claim a current or exhaustive market scan.
Choose the decision lens
Choose one lens and keep it through the analysis:
- **Product:** the entrant extends a product into another buyer, problem, or category. - **Services:** the entrant adds a service line using relationships, expertise, or delivery capacity. - **Operator:** the entrant builds, buys, or operates a business in the adjacent market.
Define the core market, current buyer and job, existing assets, strategic objective, constraints, geography, and time horizon. A supplied customer is an exemplar, not the entire segment.
Method
1. **Frame the evidence.** Record source, date, geography, segment, and whether each input is observed, reported, modeled, or unknown. Note freshness and material gaps before ranking candidates. 2. **Map three horizons.** H1 is the well-served core, where price pressure is usually greatest. H2 is an emerging area where buyers already spend adjacent budget. H3 is an option suggested by technology or market change but not yet supported by established demand. Do not present an H3 option as current revenue. 3. **Work all three adjacency vectors.** Customer-adjacent means the same economic buyer with a new problem. Capability-adjacent means the same technology, data, or delivery capability for a new buyer. Channel-adjacent means the same sales motion or distribution relationship with a new offer. Tag each candidate by its primary vector and note secondary vectors. 4. **Apply the budget-line test.** Ask what the buyer would cut or defer to fund the new offer and who else competes for that same budget. Category or industry-code proximity alone is not evidence of adjacency. 5. **Map transfer and gaps.** Compare customer relationships, proof, data, workflow knowledge, delivery skills, integrations, compliance, channel, and commercial model. Product similarity does not establish buyer access, and a shared buyer does not establish capability fit. 6. **Assess buyer change and market conditions.** Examine the problem, alternatives, purchase process, willingness-to-change evidence, competitive density, concentration, pricing-power signals, regulation, sales cycle, and switching costs. Keep attractiveness separate from density. Few competitors can mean weak demand or high barriers. 7. **Calibrate the evidence floor.** For small, nonprofit, or fragmented markets, use niche directories, registries, member lists, conference populations, grants, and named-customer distribution. For regulated markets, use regulatory, customer, and filing evidence for eligibility, authorization, contract duration, integration depth, and policy timing. Do not import enterprise-software thresholds without checking fit. 8. **Rank and sequence.** Compare strategic fit, access, capability gap, execution burden, economics, reversibility, and evidence quality. Rank no more than five candidates and state what must be true for each of the top three to materialize. In a customer-anchored run, at least one of the top three must test a meaningfully different buyer, funding base, vertical, or channel rather than three variants of the exemplar's current market. Recommend the next learning or entry sequence with explicit stop signals.
Output
Return
- decision lens, core definition, evidence coverage, and three-horizon map; - adjacency candidate table with primary vector and budget line; - transferable-assets and capability-gap matrix; - top three adjacencies, each with entry rationale and what must be true; - family confidence from 1–5 with the limiting factor: recency, source independence, triangulation, or sensitivity; - risks, disconfirming evidence, validation sequence, and sources.
Capture source URLs while researching. Cite each non-trivial external claim at the point of use, reproduce every source in a Sources section, tag each source as vendor-published, analyst-independent, analyst-sponsored, industry-press, academic, customer-reported, primary-interview, or another clearly defined type, and verify every URL-to-claim pairing before finalizing. Keep revenue potential distinct from gross-margin potential, label assumptions and model periods, and do not invent missing denominators. This method proposes research and sequencing; it does not approve market entry, publish an artifact, or contact a third party.