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Market Opportunity Recognition

Market Opportunity Recognition. Creativity Characterized by originality and expressiveness; imaginative Imagination The formation of a mental image of something that is neither perceived as real nor present to the senses. Idea

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Market Opportunity Recognition

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  1. Market Opportunity Recognition

  2. Creativity Characterized by originality and expressiveness; imaginative Imagination The formation of a mental image of something that is neither perceived as real nor present to the senses. Idea Something, such as a thought or conception, that potentially or actually exists in the mind as a product of mental activity. Opportunity A favourable or advantageous circumstance or combination of circumstances. Definitions Imagination is more important than knowledge… Albert Einstein (1879-1955)

  3. Creative v Logical Thinking Creative Logical Seeks questions Diverges Explores different views Restructures Seeks ways an idea might help Welcomes discontinuous leaps Welcomes chance intrusions Open ended Seeks answers Converges Asserts best or right view Using existing structure Says when an idea will not work Uses logical steps Focuses on what is relevant Closed

  4. Innovation Is the process by which entrepreneurs convert opportunities into marketable ideas. It is the means by which they become catalysts for change. “The single biggest cause of failure is not lack of money but that you haven’t come up with something that the world wants.” Larry C.Farrell • New Product • New method of doing the same product • New Source of Raw materials • New Market • New way of organising your business

  5. Drucker’s Sources of Innovative Opportunity The unexpected. Success IBM. Failure Jacket Potatoes The incongruity. Possible v Actual. Overnight Delivery. Process needs. Sugar free products. Caffeine free. Changes in industry/market structure. Digital Cameras PLUS Demographic changes. Age profile Changes in perception, mood or meaning. Fashion New knowledge. Mobile phones.

  6. INVENTION - totally new, product or service [Airplane, Light bulb, Telephone] EXTENSION – New use or different application of existing product or service [McDonalds, Holiday Inn] DUPLICATION – Creative replication of an existing concept [Pizza Hut, Virgin] SYNTHESIS – Combining into a new formulation [Internet Cafes] Types of Innovation

  7. HBDI Herrmann Brain Dominance Instrument

  8. Opportunity Defined An opportunity is a favorable set of circumstances that creates the need for a new product, service, or business idea. Most entrepreneurial firms are started in one of two ways: Some firms are internally stimulated. An entrepreneur decides to start a firm, searches for and recognizes an opportunity, then starts a business. Other firms are externally stimulated. An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it. What is an Opportunity?

  9. What is an Opportunity? An opportunity has four essential qualities

  10. Window of Opportunity & Life Cycle $100M $50M $25M $3M $1M Window of opportunity Start up High Growth Maturity Stability Time (years)

  11. Three Classic Life Cycles 500 100 25 5 1 High potential firm In $Millions Foundation firm Lifestyle firm 1 2 3 4 5 6 7 8 9 10 Years

  12. Three Ways to Identify An Opportunity

  13. Observing Trends First Approach: Observing Trends Environmental Trends Suggesting Business or Product Opportunity Gaps

  14. Environmental Scanning Scanning: Detect Changes Monitoring: Track Events Affecting Business Forecasting: Making Plausible Projections Assessing: ‘What does it all mean?’

  15. Trends identify emerging needs.. SEEDTIPanalysis Societal/sociological trends Economic trends Environmental/Ecological trends Demographic trends Technological trends International trends Political/Legal trends When two or more trends come together… Trend Analysis • [Café society] • [Life coaches] • [Ecotourism] • [In home care] • [VOIP] • [China/India emerging] • [Health & Safety] http://www.trendhunter.com/trends/interactive-wallpaper-sl2010-allyearlong-calendar http://www.springwise.com/

  16. Exploit trends 24 hour society ‘Money rich, time poor’ Demographic change: age, urban living, growth patterns Environmental issues Globalisation Legislation Desire for ‘gadgets’ Communication

  17. Solving a Problem Second Approach: Solving a Problem Sometimes identifying opportunities simply involves noticing a problem and finding a way to solve it. These problems can be pinpointed through observing trends and through more simple means, such as intuition, serendipity, or chance. Some business ideas are clearly initiated to solve a problem. For example, Symantec Corp. created Norton antivirus software to guard computers against viruses.

  18. Solving a Problem Businesses Created to Solve a Problem

  19. Left xmas shopping too late, couldn’t find last minute gadgets GADGET SHOP Market opportunity to sell mobile phones direct CAR PHONE WAREHOUSE Wife crying because of seven days wait for new glasses VISION EXPRESS Passion for making scents and lotions turned into JO MALONE How entrepreneurs found ideas Create Curiosity – Open Mind & Observation of Circumstances

  20. Finding Gaps in the Marketplace Gaps in the Marketplace A third approach to identifying opportunities is to find a gap in the marketplace. A gap in the marketplace is often created when a product or service is needed by a specific group of people but doesn’t represent a large enough market to be of interest to mainstream retailers or manufacturers. This is the reason that small clothing boutiques and specialty shops exist. The small boutiques, which often sell designer clothes or clothing for hard-to-fit people, are willing to carry merchandise that doesn’t sell in large enough quantities for Wal-Mart, GAP, or JC Penney to carry. Third Approach: Finding Gaps in the Marketplace

  21. Personal Characteristics of the Entrepreneur Characteristics that tend to make some people better at recognizing opportunities than others Prior Experience Social Networks Cognitive Factors Creativity

  22. Social Capital - Per Lovgren Network of Professors of Engineering Management Consultants Foundry Consultants Network of Management Consultants Birley & Muzyka (2000:45)

  23. Who Do You Know? Professional Contacts Tutors Family Advisors YOU Friends Other Students Work Colleagues Staff

  24. Sources Of Ideas Insights - experience in profession or industry 43% Challenge - could do better 15% Unfilled/overlooked niche in marketplace 11% Systematic search for business opportunities 7% Brainstorm - cannot explain it 5% Hobby or vocational interest 3% Source: Entrepreneurship, John G Burch

  25. Ideas Personality Motivation & Drivers Ability to Learn Capabilities Know How & Expertise Relationships & Contacts Unlocking Personal Value Opportunities Ventures Unlocking Value Rae (1999)

  26. What Kind of Business Should I Start? Start with what you know. Do what you love. Don’t reinvent the wheel, just make it better Focus on a niche Consider the franchising option Know what sets you apart from the competition Imitate an existing product Buy an existing business Become and agent or distributor Sell your services as a consultant More…? Above all take your time Source: entrepreneur.com

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