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Market opportunity analysis where will the business compete?. Learning objectives. What is market opportunity analysis? How to identify unmet and/or underserved customer needs? How to identify the most attractive customers? How to assess your competitive advantage?

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learning objectives
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
learning objectives3
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
market opportunity analysis
Market opportunity analysis

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 analysis5
Market opportunity analysis

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

market opportunity analysis6
Market opportunity analysis

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

market opportunity analysis7
Market opportunity analysis

Create More Efficient Markets, e.g., eBay

Enable Ease of Access, e.g., Gap

Liberate Trapped Value

Create More Efficient Systems, e.g., FedEx

Look at Value System to Discover New Business Opportunities

Disrupt Current Pricing Power, e.g., Priceline

Customize Offerings, e.g. MyYahoo

Extend Reach and Access, e.g., keen.com

Introduce New-to-the-World Value

Build Community, e.g., MyFamily.com

Enable Collaboration, e.g., ProjectPoint

Introduce New Functionality/Expertise, e.g., C-Mode

market opportunity analysis8
Market opportunity analysis

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?
  • (see pg.81)
market opportunity analysis9
Market opportunity analysis

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
  • 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

Technology

Company

  • Analysis of the company environment provides the current state of the company’s resources
  • 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

Competition

market opportunity analysis10
Market opportunity analysis

Customer

Competition

Company

Technology

learning objectives11
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
identify customer needs
Identify customer needs

The “Customer Decision Process” framework: analyze and discover customer needs

  • Problem Recognition

Gift

Interested in Author/Subject Matter

Need for Activity/Class

Information Gathering

Read Reviews

Search for Availability

Review Contents

Prepurchase

Evaluation

Price

Quality

Availability

Fits Needs

  • Purchase Decision

Purchase Offline

Purchase Online

Purchase

Arrived on Time

Good Quality of Contents

Easy Buying Experience

  • Satisfaction

Postpurchase

  • Loyalty

High Percentage of Consumers’ Book Purchases

Repeat Purchases

identify customer needs13
Identify 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?
learning objectives14
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
identify specific customers
Identify specific customers

Market segmentation approaches: identify customers (must-haves vs nice to have)

identify specific customers16
Identify specific customers

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.
learning objectives17
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
assess competitive advantages
Assess competitive advantages

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
assess competitive advantages20
Assess competitive advantages

Competitor mapping

  • Assess competition intensity
    • Identify underserved and most competitive areas;
    • Identify current competitors’ strengths
    • Identify collaborators
  • Assess competitive hurdles
assess competitive advantages21
Assess competitive advantages

Competitor mapping:

Medium performance level

High performance level

Low performance level

learning objectives22
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
assess resource needs
Assess resource needs

Resource characteristics:

  • central to delivering new benefits or unlocking trapped value.
  • Hold the promise for winning against current and prospective competitors.
assess resource needs24
Assess resource needs

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.
assess resource needs25
Assess resource needs

Partnership: close resource gaps

  • Complementary: Intel & Microsoft.
  • Capability: AOL & Associated Press.
learning objectives26
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
assess technology s market readiness
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 readiness28
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 readiness29
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
learning objectives31
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
craft an opportunity story
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 objectives33
Learning objectives
  • What is market opportunity analysis?
  • How to identify unmet and/or underserved 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?
assess 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 attractiveness35
Assess opportunity\'s attractiveness

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%
assess opportunity s attractiveness36
Assess opportunity\'s attractiveness

Priceline.com’s overall opportunity assessment:

marketwatch com
Marketwatch.com

Step 1: Identify unmet and underserved needs

Process Steps

Unmet and Underserved Needs

  • News constantly updated around the clock
  • Real-time quotes
  • Comprehensive chart data

View Current Business and Financial News

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

marketwatch com38
Marketwatch.com

Step 1: Identify unmet and underserved needs

marketwatch com39
Marketwatch.com

Step 2: Identify specific customers

marketwatch com40
Marketwatch.com

Step 3: Assess competitive advantage

marketwatch com41
Marketwatch.com

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
marketwatch com42
Marketwatch.com

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
marketwatch com43
Marketwatch.com

Step 6: Craft an opportunity story:

marketwatch com44
Marketwatch.com

Step 7: Assess opportunity’s attractiveness:

Positive Factor

Neutral Factor

Negative Factor

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