Agencies involved in supporting craft-based clusters seem to be captivated either by a value-chain upgrading approach or a sustainable livelihoods approach. This article argues that craft villages in Vietnam consist of three distinct types of producer who need different policy packages:
a livelihoods approach for survival producers; a value chain upgrading approach for catalytic growth-oriented producers; and a mixed package for other growth-oriented producers. Therefore, instead of using one or the other approach for a specific craft village, policy makers might do well
to differentiate their policy packages for distinct types of producer inside particular craft villages. This market segmentation by producer can also be applied by implementing agencies in contexts where government policy is not a factor in programme design.