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Market opportunity analysis where will the business compete?

Market opportunity analysis where will the business compete?

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Market opportunity analysis where will the business compete?

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  1. Market opportunity analysiswhere will the business compete?

  2. 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?

  3. 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?

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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)

  9. 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

  10. Market opportunity analysis Customer Competition Company Technology

  11. 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?

  12. 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

  13. 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?

  14. 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?

  15. Identify specific customers Market segmentation approaches: identify customers (must-haves vs nice to have)

  16. 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.

  17. 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?

  18. 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

  19. Assess competitive advantages

  20. Assess competitive advantages Competitor mapping • Assess competition intensity • Identify underserved and most competitive areas; • Identify current competitors’ strengths • Identify collaborators • Assess competitive hurdles

  21. Assess competitive advantages Competitor mapping: Medium performance level High performance level Low performance level

  22. 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?

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

  24. 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.

  25. Assess resource needs Partnership: close resource gaps • Complementary: Intel & Microsoft. • Capability: AOL & Associated Press.

  26. 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?

  27. 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?

  28. 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?

  29. 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

  30. Assess technology’s market readiness Source: The Net Effect

  31. 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?

  32. 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

  33. 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?

  34. 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

  35. 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%

  36. Assess opportunity's attractiveness Priceline.com’s overall opportunity assessment:

  37. 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

  38. Marketwatch.com Step 1: Identify unmet and underserved needs

  39. Marketwatch.com Step 2: Identify specific customers

  40. Marketwatch.com Step 3: Assess competitive advantage

  41. 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

  42. 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

  43. Marketwatch.com Step 6: Craft an opportunity story:

  44. Marketwatch.com Step 7: Assess opportunity’s attractiveness: Positive Factor Neutral Factor Negative Factor