Market opportunity analysis

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What is market opportunity analysis? …

What is market opportunity analysis?
How to identify unmet and/or under-served customer needs?
How to identify the most attractive customers?
How to assess your competitive advantage?
How to assess your resource needs?
How to assess the market readiness of technology?
How to craft an opportunity story?
How to assess the market opportunity’s attractiveness?

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  • 1. Prepared By ; Gihan Aboueleish
  • 2. 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? Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 2
  • 3. 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 Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 3
  • 4. A value chain: a set of value creating activitieswithin a firm.A value system: a set of value creatingactivities connecting a firm with other firmsand customers Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 4
  • 5. Considerations for value creation:Trapped value: efficiency, accessibility, customer empowermentNew value: personalization, extension, community-building, collaborationHorizontal plays: improve functional operationsVertical plays: improve industry specific business activities Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 5
  • 6. Create More Efficient Markets, e.g., eBay Enable Ease of Liberate Access, e.g., Gap Trapped Create More Efficient Value Systems, e.g., FedEx Disrupt Current Look at Value Pricing Power, e.g.,System to Discover Priceline New Business Opportunities Customize Offerings, e.g. MyYahoo Extend Reach and Access, e.g., Introduce keen.com New-to- Build Community, e.g., the-World MyFamily.com Value Enable Collaboration, e.g., ProjectPoint Introduce New Functionality/Expertise, e.g., C- Mode Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 6
  • 7. 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? Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 7
  • 8. How? Using a market opportunity analysis framework that revolves around four key elements:  Analysis of the customer environment uncovers unmet or Customer underserved customer needs, as well as the market they occupy  Analysis of the technology environment reveals the readiness of Technology the particular technology, as well as any alternative technologies, on which the manager anticipates deploying the firm’s offering  Analysis of the company environment provides the current state of Company the company’s resources  Analysis of the competition environment reveal the structure of theCompetition industry and market, key competitors in the marketplace, and the firm’s relative advantage to each of the key players Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 8
  • 9. Identify the Unmet and/ or Underserved Customer Need Identify the Unmet and/ or Underserved Customer Need Customer Identify the Specific Customers a Company Will Pursue Identify the Specific Customers a Company Will Pursue Assess Advantage Relative to Competition Assess Advantage Relative to CompetitionCompetition Assess the Company’s Resources to Deliver the Offering Assess the Company’s Resources to Deliver the Offering CompanyTechnology Assess Market Readiness of Technology Assess Market Readiness of Technology Specify Opportunity in Concrete Terms Specify Opportunity in Concrete Terms Assess Opportunity Attractiveness Assess Opportunity Attractiveness Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 9
  • 10. The “Customer Decision Process” framework: analyze and discover customer needs Interested in Problem Recognition Gift Need for Activity/Class Author/Subject Matter Prepurchase Information Gathering Read Reviews Search for Availability Review Contents Evaluation Price Quality Availability Fits Needs Purchase Purchase Decision Purchase Online Purchase Offline Satisfaction Arrived on Time Good Quality of Contents Easy Buying ExperiencePostpurchase Loyalty Repeat Purchases High Percentage of Consumers’ Book Purchases Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 10
  • 11. 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? Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 11
  • 12. Market segmentation approaches: identify customers (must-haves vs nice to have) Segmentation Type Description Examples - VariablesGeographic  Divides the market into different  Country / region / city geographical unitsDemographic  Divides the market on the basis  Age, gender, income of demographic variablesFirmographic  Divides the market on the basis  Number of employees, company size of company-specific variablesBehavioral  Divides the market based on how  Website loyalty, prior purchases customers actually buy and use the productOccasion  Divides the market based on the  Routine occasion, special occasion(Situational) situation that leads to a product need, purchase, or usePsychographic  Divides the market based on  Personality (laid back, type A), lifestyle and / or personality lifestyleBenefits  Divides the market based on  Convenience, economy, quality benefits or qualities sought from the product Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 12
  • 13. Actionable segmentation:  easy to identify  readily reached  described in terms of their growth, size, profile & attractivenessMeaningful 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. Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 13
  • 14. Direct competitors;  Firms offering products or services that are “close substitute”  Rivals in the same industryIndirect 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 Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 14
  • 15. 18-Oct-12 15Market opportunity Analysis - Gihan Aboueleish
  • 16.  Competitor mapping; Assess competition intensity Identify underserved and most competitive areas; Identify current competitors’ strengths Identify collaborators Assess competitive hurdles Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 16
  • 17. Competitor mapping: Target Segments Kodak Canon Snapfish  Disposable cameras  Low-end film and digital  Limited low-end cameras  Deals on servicesCost-Conscious cameras  No services  No products  No deals on developing  Mid-line camerasMiddle-Income  Mid-range cameras  Film  Services—developing,Families with  No services sharing, gift cards  Photo services;Children developing, sharing  High-quality accessories  High-tech productsHigh Income/Tech (film, paper, CDs)  Software  Services, though limitedSavvy  Products are less  Printers—consumers sophisticated don’t need to process High performance level Medium performance level Low performance level 18-Oct-12 17 Market opportunity Analysis - Gihan Aboueleish
  • 18. Resource characteristics;  Central to delivering new benefits or unlocking trapped value.  Hold the promise for winning against current and prospective competitors. Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 18
  • 19. 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. Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 19
  • 20. Partnership: close resource gaps; Complementary: Intel & Microsoft. Capability: AOL & Associated Press. Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 20
  • 21. 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? Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 21
  • 22. 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? Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 22
  • 23.  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 Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 23
  • 24.  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 Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 24
  • 25. 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% Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 25
  • 26. Priceline.com’s overall opportunity assessment: Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 26
  • 27. Step 1: Identify unmet and underserved needs Process Steps Unmet and Underserved Needs View Current Business and  News constantly updated around the clock Financial News  Real-time quotes  Comprehensive chart data Read Analysis / Commentary  “Story behind the numbers” from experienced staff Learn About Investing  Education on investing options and strategies Plan Investment Strategy  Personalized investment tools Place Stock Order* Track Portfolio Performance  Comprehensive portfolio tracking Tax Reporting Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 27
  • 28. Step 1: Identify unmet and underserved needs Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 28
  • 29. Step 2: Identify specific customers Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 29
  • 30. Step 3: Assess competitive advantage Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 30
  • 31. Step 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 Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 31
  • 32. Step 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 Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 32
  • 33. Step 6: Craft an opportunity story: Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 33
  • 34. Step 7: Assess opportunity’s attractiveness:PositiveFactorNeutralFactorNegative Competitive Magnitude of Interaction Likely Role of Technology Market Size Level of Factor Vulnerability Unmet Needs Between Growth Vulnerability Profitability Segments Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 34
  • 35. Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 35