A business needs to find its own niche along this T-cone and figure out at which step it can establish its own one-of-a-kind value proposition.

What is the common denominator for airlines, trains, and vehicles?

Well, they all serve a common customer need – to provide reliable transportation from A to B.

Yet, they are different – They differ in the specifics of the common customer need they attend to.

Airlines are for speedy transportation, trains are for economic transportation, and vehicles are for D.I.Y. transportation.

Customers have choices. They choose airlines if they need to go somewhere fast, they take on trains if money is of concern, and they drive themselves if freedom and flexibility are of utmost importance to them.

For those who drive themselves, their needs can be further specified:

A mom chooses a vehicle for safety and comfortable space, a businessman chooses a vehicle for a sense of accomplishment and social recognition, and a teenager chooses a vehicle for a spirit of fun and independence.

The specification continues:

With that spirit of fun and independence, some teenagers lean toward a vehicle with cool gears and cool styling, some prefer a vehicle with great gas mileage, some want a vehicle with more passenger seats, and some need a vehicle with added storage space.

The specification goes on and on …

Each round of specifications is to make one step further in narrowing down the customer base. As illustrated in this diagram. If a business stops at the ground level by serving the public with a generic transportation need, it standardizes customer needs at the mass level. If it goes one step further by focusing on teenagers, it zooms in on what matters to teenagers in general. If it digs deeper by laser focusing on college students only, it can zero in on what matters to college students the most.

Along this T-cone, one step upward, businesses serve more people with less specific value propositions; and one step downward, businesses serve fewer people with more specific value propositions. One is to go broad and one is to go deep.

Between going broad and going deep, there is a balance. Going extremely broad, the market can be saturated; and going extremely deep, the market can be desolate. A business has to find its own niche along this T-cone and figure out at which step it can establish its own one-of-a-kind value proposition.