Intense competitive and turbulent economic conditions have forced American businesses to re-examine every aspect of their strategies, from organization to how they publicly present what they sell. A Theory of Market Strategy uses economic theory to derive concepts of market strategy involving the exploitation of the differences in potential consumers and in products. That is, a firm can create a market strategy for a new product that takes into account the fact that different customers will be willing to pay different prices based on their expertise and perception of the product's value. In addition, this strategy considers that consumers will also want different models of the product. In the first half of this work, Geruson develops these concepts, showing that the key to successful market strategy is the exploitation of "two dimensional market heterogeneity", a new idea that integrates and enhances the concepts of product differentiation, price discrimination, market segmentation, information signalling, and customer purchase risk reduction. The second half follows with applications to these concepts in regard to the mainframe computer industry. In-depth examples from IBM and niche computer companies Cray, Tandem, and Control Data show how to practically implement the ideas and provide many lessons on the hidden pitfalls and secrets to success in market strategy. The book derives from Geruson's dissertation at Oxford University and has been augmented by his experience at International Business Machines, Incorporated and Toshiba International, making it accessible to sophisticated practitioners in market strategy and strategic planning.