Market opportunity analysis

Prepared By ; Gihan Aboueleish

1. 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?

18-Oct-12 2 Market opportunity Analysis - Gihan Aboueleish

What? 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


A 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


Considerations 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


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


Questions 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?


How? Using a market opportunity analysis framework that revolves

around four key elements:

Customer Analysis of the customer environment uncovers unmet or

underserved customer needs, as well as the market they occupy

Technology 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

Competition

Analysis of the company environment provides the current state of

the company’s resources Company

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


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

Customer

Technology

Competition

Company


Po

stp

urc

ha

se

Search for Availability Read Reviews Review Contents

Evaluation

Problem Recognition

Information Gathering

Purchase Decision

Satisfaction

Pre

pu

rch

as

e

Pu

rch

ase

Need for Activity/Class Gift Interested in

Author/Subject Matter

Good Quality of Contents Arrived on Time

Loyalty

Quality Price 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


Questions 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?


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)


Actionable 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.


Direct 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



Competitor mapping;

Assess competition intensity

Identify underserved and most competitive areas;

Identify current competitors’ strengths

Identify collaborators

Assess competitive hurdles


Target Segments Kodak Canon Snapfish

Cost-Conscious

Disposable cameras

Low-end film and digital cameras

No deals on developing

Limited low-end cameras

No services

Deals on services

No products

Middle-Income Families with Children

Mid-line cameras

Film

Photo services; developing, sharing

Mid-range cameras

No services

Services—developing, sharing, gift cards

High Income/Tech Savvy

High-quality accessories (film, paper, CDs)

Products are less sophisticated

High-tech products

Software

Printers—consumers don’t need to process

Services, though limited

High performance level Medium performance level Low performance level

Competitor mapping:


Resource characteristics;

Central to delivering new benefits or unlocking

trapped value.

Hold the promise for winning against current and prospective competitors.


Three 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.


Partnership: close resource gaps;

Complementary: Intel & Microsoft.

Capability: AOL & Associated Press.


A high-level judgment on; Technology sensibility;

What are the technology trends?

How sensible 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?


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?


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 in-house, 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


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


Five attractiveness factors:

Unconstrained opportunity, e.g., eBay

Segment interaction, e.g., Zoomerang.com

Growth rate: 30-50% annual growth of customer market

Market size, e.g., pet food and supplies market generates $23 billion of sales

Profitability, e.g., profit margin at eBay’s auction market is 80%


Priceline.com’s overall opportunity assessment:


Process Steps

View Current Business and Financial News

Plan Investment Strategy

Place Stock Order*

Track Portfolio Performance

Tax 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 Investing

Read Analysis / Commentary

Education on investing options and strategies

Step 1: Identify unmet and underserved needs


Step 1: Identify unmet and underserved needs


Step 2: Identify specific customers


Step 3: Assess competitive advantage


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

Step 4: Assess resource needs


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

Step 5: Assess technology’s market readiness:


Step 6: Craft an opportunity story:


Competitive

Vulnerability

Magnitude of

Unmet Needs

Interaction

Between

Segments

Likely Role of

Growth

Technology

Vulnerability

Market Size Level of

Profitability

Neutral

Factor

Positive

Factor

Negative

Factor

Step 7: Assess opportunity’s attractiveness:


18-Oct-12 Market opportunity Analysis - Gihan Aboueleish 35

Market opportunity analysis

Business

market opportunity analysis

companys resources

specific customers

market based

critical capabilities

competitor mapping

experienced staff

level judgment