Yes, a word processing app like MS Word is technically more suitable for typesetting than it is for writing. No, that's not a major problem.
I tried building a similar project some 10 years ago, when "Zen writing tools" were all the rage.
Nobody wanted to pay for it. It wasn't general purpose enough to be usable by the general public. And novelists (who I was targeting) are poor and cheap. 90% of people who say they are "working on a novel" will never finish it to ever even try to sell it. Of those that do finish, 90% of them won't make more than pocket change. For the weirdos who finish and make significant sales, the app they used to write was never a significant problem for them. They usually have an anachronistic approach that has nothing to do with productivity and everything to do with personal taste and comfort (George R. R. Martin famously uses WordStar 4.0 on an MS-DOS system).
If you want to make an app for writers, don't make it around the writing process. What aspiring authors need, first and foremost, is training on how to finish a manuacript. After that, everything else is a minor annoyance in comparison. But some of the most common areas where people seem to drop the ball so close to the goal line are: not having a good editor, screwing up the typesetting, having dorky cover art, and thinking posting on Twitter once a week counts as marketing.
The 90% of dreamers don't have what it takes and they know it. They don't even invest their time, so they're certainly not going to invest their money. Tackle trying to convert more of the 10% of finishers into sellers. That might involve a writing tool as a hook to get people in, but the salable part of the app will probably never be the writing process itself.
There are successful products who are in this space - scrivener, for example. None of the things you talk about what authors needs are in the realm of app space, they're business problems.
The question is what did your app offer that scrivener didn't? What does this app offer that scrivener doesn't? I can't even tell if this Lunette is a web app or has an installable version, subscription, etc.
The problems you're talking about - marketing, front cover, typesetting - those don't really matter until you have at least a draft written, and probably not even then. A writing focused word processor isn't supposed to solve those problems, and once you have a manuscript the issues are solved by hiring an experienced editor (except the marketing which not everyone can do).
The writing part of the app is where people will spend the overwhelming majority of their time, and intruding on it trying to convert them to buying your other services is likely to chase them to scrivener or some other competitor. You're just trying to solve writing unrelated problems with an app that is marketed towards new writers that dont have those problems in front of them, and everyone with money can solve it without you.
Word was less WYSIWYG before the ribbon. The default "Normal" layout elided a bunch of rendering like headers and footers and could lazily repaginate unlike Print Layout mode which is now the default. "Normal" is now "Draft" mode with a few enhancements. Just use MS Word in Draft and don't use manual formatting.
iA Writer is an app that fills this niche, and does it wonderfully. People justify spending hundreds online for their entire app suite because of the simplicity of this software.
I tried building a similar project some 10 years ago, when "Zen writing tools" were all the rage.
Nobody wanted to pay for it. It wasn't general purpose enough to be usable by the general public. And novelists (who I was targeting) are poor and cheap. 90% of people who say they are "working on a novel" will never finish it to ever even try to sell it. Of those that do finish, 90% of them won't make more than pocket change. For the weirdos who finish and make significant sales, the app they used to write was never a significant problem for them. They usually have an anachronistic approach that has nothing to do with productivity and everything to do with personal taste and comfort (George R. R. Martin famously uses WordStar 4.0 on an MS-DOS system).
If you want to make an app for writers, don't make it around the writing process. What aspiring authors need, first and foremost, is training on how to finish a manuacript. After that, everything else is a minor annoyance in comparison. But some of the most common areas where people seem to drop the ball so close to the goal line are: not having a good editor, screwing up the typesetting, having dorky cover art, and thinking posting on Twitter once a week counts as marketing.
The 90% of dreamers don't have what it takes and they know it. They don't even invest their time, so they're certainly not going to invest their money. Tackle trying to convert more of the 10% of finishers into sellers. That might involve a writing tool as a hook to get people in, but the salable part of the app will probably never be the writing process itself.