Market opportunity analysis where will the business compete?

Name: Market opportunity analysis where will the business compete?
Uploaded: 2017-08-18T13:55:57+00:00
Duration: PTM17S59
Channel: Keely Lind
Description: Market opportunity analysis where will the business compete?

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? 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
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

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

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)

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 Company Analysis of the company environment provides the current state of the company’s resources Competition 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

Customer Competition Company Technology

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 Online Purchase Offline Purchase Satisfaction Arrived on Time Good Quality of Contents Easy Buying Experience Postpurchase Loyalty Repeat Purchases High Percentage of Consumers’ Book Purchases

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?

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

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.

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

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

Competitor mapping: High performance level Medium performance level Low performance level

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

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?

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?

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

Source: The Net Effect

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

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

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:

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.com Step 1: Identify unmet and underserved needs

Marketwatch.com Step 2: Identify specific customers

Marketwatch.com Step 3: Assess competitive advantage

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.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.com Step 6: Craft an opportunity story:

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

Market opportunity analysis where will the business compete?

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