Market opportunity analysis where will the business compete?
Apr 01, 2015
Market opportunity analysiswhere will the business compete?
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Market opportunity analysisWhat? A tool to identify and assess the
attractiveness of business opportunity
Why? Unique e-commerce environment:• Competition across (vs within) industry boundary• Competition between co-opetitors (vs
competitors)• Competition on speed of response• New ways to bring value to customers• New ways to reconfigure value chains & value
systems
Market opportunity analysisA value chain: a set of value creating
activities within a firm
A value system: a set of value creating activities connecting a firm with other firms and customers
Market opportunity analysisConsiderations for value creation:
Trapped value: efficiency, accessibility, customer empowerment
New value: personalization, extension, community-building, collaboration
Horizontal plays: improve functional operations
Vertical plays: improve industry specific business activities
Market opportunity analysis
Look at Value System to
Discover New Business
Opportunities
Liberate Trapped
Value
Introduce New-to-
the-World Value
Create More Efficient Markets, e.g., eBay
Enable Ease of Access, e.g., Gap
Customize Offerings, e.g. MyYahoo
Extend Reach and Access, e.g., keen.com
Create More Efficient Systems, e.g., FedEx
Disrupt Current Pricing Power, e.g., Priceline
Build Community, e.g., MyFamily.com
Enable Collaboration, e.g., ProjectPoint
Introduce New Functionality/Expertise, e.g., C-Mode
Market opportunity analysisQuestions for value creation:• Is there a high degree of asymmetric information
between buyers & sellers that trap values?• Are significant amount of time & resources
consumed in bringing people together to make a transaction or complete a task?
• Do customers view activities as more collapsed than do industry participants?
• (see pg.81)
Market opportunity analysisHow? Using a market opportunity analysis framework that revolves
around four key elements:
CustomerCustomer Analysis of the customer environment uncovers unmet or
underserved customer needs, as well as the market they occupy
TechnologyTechnology Analysis of the technology environment reveals the readiness of
the particular technology, as well as any alternative technologies, on which the manager anticipates deploying the firm’s offering
CompetitionCompetition
Analysis of the company environment provides the current state of the company’s resourcesCompanyCompany
Analysis of the competition environment reveal the structure of the industry and market, key competitors in the marketplace, and the firm’s relative advantage to each of the key players
Market opportunity analysis
Specify Opportunity in Concrete TermsSpecify Opportunity in Concrete Terms
Assess Advantage Relative to CompetitionAssess Advantage Relative to Competition
Assess the Company’s Resources to Deliver the OfferingAssess the Company’s Resources to Deliver the Offering
Assess Market Readiness of TechnologyAssess Market Readiness of Technology
Identify the Specific Customers a Company Will PursueIdentify the Specific Customers a Company Will Pursue
Identify the Unmet and/ or Underserved Customer NeedIdentify the Unmet and/ or Underserved Customer Need
Assess Opportunity AttractivenessAssess Opportunity Attractiveness
CustomerCustomer
TechnologyTechnology
CompetitionCompetition
CompanyCompany
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Identify customer needsP
ost
pu
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ase
Search for AvailabilityRead Reviews Review Contents
EvaluationEvaluation
Problem Recognition Problem Recognition
Information GatheringInformation Gathering
Purchase Decision Purchase Decision
Satisfaction Satisfaction
Pre
pu
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ase
Pu
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Need for Activity/ClassGift Interested in Author/Subject Matter
Good Quality of ContentsArrived on Time
Loyalty Loyalty
QualityPrice Availability Fits Needs
Purchase Online Purchase Offline
Easy Buying Experience
Repeat Purchases High Percentage of Consumers’ Book
Purchases
The “Customer Decision Process” framework: analyze and discover customer needs
Identify customer needsQuestions to reveal unmet or underserved needs:• What is the ideal customer experience?• Is there a gap between customers’ actual and
ideal experience?• What are customer beliefs and associations
about the buying process?• What barriers block some/all potential
customers?• What are the opportunities to enhance the
customers’ experience?
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Identify specific customers
Segmentation Type Description Examples - Variables
Geographic
Divides the market into different geographical units
Country / region / city
Demographic Divides the market on the basis of demographic variables
Age, gender, income
Firmographic Divides the market on the basis of company-specific variables
Number of employees, company size
Behavioral Divides the market based on how customers actually buy and use the product
Website loyalty, prior purchases
Occasion (Situational)
Divides the market based on the situation that leads to a product need, purchase, or use
Routine occasion, special occasion
Psychographic Divides the market based on lifestyle and / or personality
Personality (laid back, type A), lifestyle
Benefits Divides the market based on benefits or qualities sought from the product
Convenience, economy, quality
Market segmentation approaches: identify customers (must-haves vs nice to have)
Identify specific customersActionable segmentation:
– easy to identify– readily reached– described in terms of their growth, size, profile & attractiveness
Meaningful segmentation:– Customers within a segment behave similarly, while customers
across segments behave in different ways.– provides some insight into customers’ motivations.– corresponds to the set of barriers customers face when they buy
or use a product or service.– corresponds with how customers currently (or could) buy or use
the product or service.– correlates to differences in profitability or cost to serve.– differences are large enough to warrant a different set of actions
by a company.
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Assess competitive advantagesDirect competitors
– Firms offering products or services that are “close substitute”
– Rivals in the same industry
Indirect competitors– Substitute Producers
• Firms that, though they reside in different industries, offer products and services that perform the same function
– Adjacent Competitors• Firms that have the potential to provide products or services
that are substitutes
Assess competitive advantages
Assess competitive advantagesCompetitor mapping
– Assess competition intensity• Identify underserved and most competitive areas;• Identify current competitors’ strengths• Identify collaborators
– Assess competitive hurdles
Assess competitive advantages
High performance level Medium performance level Low performance level
Competitor mapping:
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Assess resource needsResource characteristics:
– central to delivering new benefits or unlocking trapped value.
– Hold the promise for winning against current and prospective competitors.
Assess resource needsThree types of resources:
– Customer-facing: brand name, a well trained sales force, and multiple distribution channels.
– Internal: technology, product development, economies of scale, and experienced staff.
– Upstream: suppliers’ relationships.
Assess resource needsPartnership: close resource gaps
– Complementary: Intel & Microsoft.– Capability: AOL & Associated Press.
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Assess technology’s market readiness
A high-level judgment on:– Technology vulnerability
• What are the technology trends?• How vulnerable is the opportunity to these trends?
– Technology adoption• What is the customers’ technology penetration rate?• What penetration is necessary to make the offering
financially viable? • When is the minimum penetration likely to be met? • Is there an introductory version that could be upgraded as
technology penetration increases?
Assess technology’s market readiness
A high-level judgment on:– Technological impacts
• What new technologies could radically alter the economics of delivering an offering or require adjustment of the actual features and functionality of an offering?
• How likely is it that your target population or competitors will use these technologies?
Assess technology’s market readiness
Moore’s Law• the processing power of successive generations
of microchips will double every 1.5 years
Gilder’s Law• total bandwidth of communications systems will
triple every 12 months
Assess technology’s market readiness
Source: The Net Effect
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Craft an opportunity story• Describe the target segment(s) within the selected value
system• Articulate the high-level value proposition• Spell out the expected elements of customer benefits • Identify the critical capabilities and resources needed to
deliver the customer benefits• Lay out the critical “reasons to believe” that the identified
capabilities and resources will be a source of relative advantage over the competition
• Categorize the critical capabilities (and supporting resources) as inhouse, build, buy, or collaborate
• Describe how the company will capture some portion of the value that it creates for its customers
• Provide an initial sense of the magnitude of the financial opportunity for the company
Learning objectives1. What is market opportunity analysis?2. How to identify unmet and/or underserved
customer needs?3. How to identify the most attractive customers?4. How to assess your competitive advantage?5. How to assess your resource needs?6. How to assess the market readiness of
technology?7. How to craft an opportunity story?8. How to assess the market opportunity’s
attractiveness?
Assess opportunity's attractiveness
What? Attractiveness = f(long-term profitability, relative competitiveness)
How? Determine the magnitude & character of the opportunity:– Level of unmet need and the magnitude of
unconstrained opportunity– Level of interaction between major customer
segments– Likely rate of growth– Size/volume of the market– Level of profitability
Assess opportunity's attractiveness
Five attractiveness factors:1. Unconstrained opportunity, e.g., eBay
2. Segment interaction, e.g., Zoomerang.com
3. Growth rate: 30-50% annual growth of customer market
4. Market size, e.g., pet food and supplies market generates $23 billion of sales
5. Profitability, e.g., profit margin at eBay’s auction market is 80%
Assess opportunity's attractiveness
Priceline.com’s overall opportunity assessment:
Marketwatch.comProcess Steps
View Current Business and Financial News
View Current Business and Financial News
Plan Investment StrategyPlan Investment Strategy
Place Stock Order*Place Stock Order*
Track Portfolio PerformanceTrack Portfolio Performance
Tax ReportingTax Reporting
News constantly updated around the clock Real-time quotes Comprehensive chart data
“Story behind the numbers” from experienced staff
Personalized investment tools
Comprehensive portfolio tracking
Unmet and Underserved Needs
Learn About InvestingLearn About Investing
Read Analysis / CommentaryRead Analysis / Commentary
Education on investing options and strategies
Step 1: Identify unmet and underserved needs
Marketwatch.comStep 1: Identify unmet and underserved needs
Marketwatch.comStep 2: Identify specific customers
Marketwatch.comStep 3: Assess competitive advantage
Marketwatch.comStep 4: Assess resource needs
• Customer-facing resource: brand name and CBS associations
• Internal asset: in-house writers• Upstream resources: access to CBS news
outlets & reporting resources; existing relationships with financial institution clients
Marketwatch.comStep 5: Assess technology’s market readiness:
• Consumers: low-bandwidth services streaming video and broadband friendly services have to wait
• Advertisers: receptive to alternative online advertising placements make technology investment accordingly
• Licensees: seamlessly integrate modularized content into their sites ensure scalability of its technology to meet increasing licensing demands
Marketwatch.comStep 6: Craft an opportunity story:
Marketwatch.com
CompetitiveVulnerability
Magnitude ofUnmet Needs
InteractionBetween
Segments
Likely Role ofGrowth
TechnologyVulnerability
Market Size Level ofProfitability
Neutral Factor
Positive Factor
Negative Factor
Step 7: Assess opportunity’s attractiveness: