Framing the Market Opportunity Chapter 2 Dr. Inas A.Hamid

When should we analyze market opportunity? Market opportunity analysis is an essential tool: Launching new business whether: Startups New ventures within an existing business.

The first key question that a company must address: “ where will the business compete? There are few or no competitors There is a large financial opportunity Where customer needs are not fully meet.

Interacting with customers 24/7. Should market opportunity analysis in networked economy differ from an analysis in more traditional sector? P.32-34. Some authors and analysts said ; yes it should, because: Competition occurs across industry boundaries Competition occurs between alliances of companies (co-opetition). Consumer behavior still in the early stages of being defined. Advances in technology lead firms to introduce a new version of its product rapidly. Interacting with customers 24/7.

Market-Opportunity Analytical Framework It consists of five stages followed by a go/no go decision. These stages are not sequential and depending on the situation. Step 1: investigate opportunity in an existing or new value system. Step 2: Identify unmet or underserved needs. Step 3: Determine target customer segments. Step 4: Assess resource requirements to deliver the offering. Step 5: Assess competitive, technological and financial attractiveness of opportunity. Step 6: conduct a go/no-go assessment.

Step 1: investigate opportunity in an existing or new value system. Value system: the entire chain of suppliers, distributers, competitors, buyers, and intermediaries that bring an existing offering to market. A firm is made up of a series of connected activities that result in the creation of an end product or the delivery of a service that result in the creation of an end product. So in this step the company should identify the arena where the new company will participate. Product delivery Purchasing inputs manufacturing Marketing and sales After sales support

So in searching for an opportunity Networked-economy companies try to: 1. Create more efficient markets: by lowering search and transaction costs, so customers can buy the best for them at a lower net cost. For example : A web can bring suppliers and buyers of products and services for small business. Customers can submit a proposal request, and qualified suppliers give quotes. The entire transaction can be arranged over the web. 2. Create more efficient value system: compressing steps in a current value system can result in saved time or cost.

3. Create new-to-the world benefits 3. Create new-to-the world benefits. These benefits can enhance an existing offer or become the basis for a new offer by at least three ways: Customize offerings, that means companies can allow customers to customize products or services, or removing features that customers do not value. Build community: The internet enables efficient community building, as seen in the explosion of chat rooms. Introduce new to the world functionality or experience. Enable ease of access.

Step 2: Identify unmet or underserved needs. What the customers need? Are these needs currently being met by other companies in the market, and if so, why will customers choose the new business over the competition? Customers will switch only if the new company does a better job of meeting some set of needs and effectively communicates its value proposition.

Customer decision mapping process. It is a framework to help managers look systematically for unmet or underserved needs. The customer decision process: Mapping the CDP may help generate new ideas about unmet needs. For example: examining the process that people go through to buy books might identify the fact that people rely on recommendations from other, So Amazon.com created a feature where customers can read reviews and comments from others., so they can get the information they need to make purchase. Post-purchase Pre-purchase Purchase

3- Determining target market There are some who have begun to question whether segmentation applies in the online world. Because the online world enables consumers to customize products, services , and information, the segmentation concepts has given away

4- Assess resources requirements to deliver the offering A company must bring a set of distinct resources to win in the market. The company should determine what capabilities and technology will be needed to deliver its benefits of the offering. Resources of a company can be grouped into three classifications: Customer-facing. Include brand name, well trained sales force and distribution channels. Internal. Resources associated with the companie,s internal operations.( technology, experienced staff). Upstream. Resources associated with a company,s relationship to its suppliers.

5- Assess competitive, Technological and Financial attractiveness of Opportunity There are many factors to determine the character of the opportunity: The number and identity of competitors The level of unmet needs. The level of interaction between major customers segments. The rate of growth How easy it is to enter the space and to differentiate the company from competitors? Is there sufficient penetration of the technologies that enables the customers to participate?

6- Conduct Go/No-Go Assessment Conducting market opportunity assessment is an important tool for managers to identify areas where their company can compete.