Market Opportunity Analysis Framework

Prepared By ; Gihan Aboueleish

1. What is market opportunity analysis?
2. How to identify unmet and/or underserved
customer needs?
3. How to identify the most attractive
customers?
4. How to assess your competitive
advantage?
5. How to assess your resource needs?
6. How to assess the market readiness of
technology?
7. How to craft an opportunity story?
8. How to assess the market opportunity’s
attractiveness?
Market opportunity Analysis - Gihan Aboueleish 18-Oct-12 2

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
Liberate Access, e.g., Gap
Trapped
Create More Efficient
Value Systems, e.g., FedEx
Disrupt Current
Look at Value Pricing Power, e.g.,
System to Discover Priceline
New Business
Opportunities Customize Offerings, e.g. MyYahoo

Extend Reach and Access, e.g.,
Introduce keen.com
New-to-
Build Community, e.g.,
the-World MyFamily.com
Value
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?


How? Using a market opportunity analysis framework that revolves
around four key elements:
 Analysis of the customer environment uncovers unmet or
Customer
underserved customer needs, as well as the market they occupy

 Analysis of the technology environment reveals the readiness of
Technology the particular technology, as well as any alternative technologies,
on which the manager anticipates deploying the firm’s offering

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

 Analysis of the competition environment reveal the structure of the
Competition industry and market, key competitors in the marketplace, and the
firm’s relative advantage to each of the key players


Identify the Unmet and/ or Underserved Customer Need
Identify the Unmet and/ or Underserved Customer Need

Customer
Identify the Specific Customers a Company Will Pursue
Identify the Specific Customers a Company Will Pursue

Assess Advantage Relative to Competition
Assess Advantage Relative to Competition
Competition

Assess the Company’s Resources to Deliver the Offering
Assess the Company’s Resources to Deliver the Offering
Company

Technology Assess Market Readiness of Technology
Assess Market Readiness of Technology

Specify Opportunity in Concrete Terms
Specify Opportunity in Concrete Terms

Assess Opportunity Attractiveness
Assess Opportunity Attractiveness


The “Customer Decision Process” framework: analyze and discover customer needs
Interested in
Problem Recognition Gift Need for Activity/Class
Author/Subject Matter
Prepurchase

Information Gathering Read Reviews Search for Availability Review Contents

Evaluation Price Quality Availability Fits Needs
Purchase

Purchase Decision Purchase Online Purchase Offline

Satisfaction Arrived on Time Good Quality of Contents Easy Buying Experience
Postpurchase

Loyalty Repeat Purchases High Percentage of
Consumers’ Book
Purchases


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?


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

Segmentation Type Description Examples - Variables
Geographic  Divides the market into different  Country / region / city
geographical units

Demographic  Divides the market on the basis  Age, gender, income
of demographic variables

Firmographic  Divides the market on the basis  Number of employees, company size
of company-specific variables

Behavioral  Divides the market based on how  Website loyalty, prior purchases
customers actually buy and use
the product
Occasion  Divides the market based on the  Routine occasion, special occasion
(Situational) situation that leads to a product
need, purchase, or use
Psychographic  Divides the market based on  Personality (laid back, type A),
lifestyle and / or personality lifestyle

Benefits  Divides the market based on  Convenience, economy, quality
benefits or qualities sought from
the product

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.


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


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Market opportunity Analysis - Gihan Aboueleish

 Competitor mapping;

Assess competition intensity
Identify underserved and most competitive areas;
Identify current competitors’ strengths
Identify collaborators

Assess competitive hurdles


Competitor mapping:

Target Segments Kodak Canon Snapfish

 Disposable cameras
 Low-end film and digital  Limited low-end cameras  Deals on services
Cost-Conscious cameras  No services  No products
 No deals on developing

 Mid-line cameras
Middle-Income  Mid-range cameras
 Film  Services—developing,
Families with  No services sharing, gift cards
 Photo services;
Children developing, sharing

 High-quality accessories  High-tech products
High Income/Tech (film, paper, CDs)  Software
 Services, though limited
Savvy  Products are less  Printers—consumers
sophisticated don’t need to process

High performance level Medium performance level Low performance level
18-Oct-12 17
Market opportunity Analysis - Gihan Aboueleish

Resource characteristics;

 Central to delivering new benefits or unlocking
trapped value.
 Hold the promise for winning against current and
prospective competitors.


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.


Partnership: close resource gaps;

Complementary: Intel & Microsoft.
Capability: AOL & Associated Press.


A high-level judgment on;
Technology sensibility;

What are the technology trends?
How sensible 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?


 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 in-house, 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


 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:


Step 1: Identify unmet and underserved needs
Process Steps Unmet and Underserved Needs
View Current Business and  News constantly updated around the clock
Financial News  Real-time quotes
 Comprehensive chart data

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

Step 1: Identify unmet and underserved needs


Step 2: Identify specific customers


Step 3: Assess competitive advantage


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


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


Step 6: Craft an opportunity story:


Step 7: Assess opportunity’s attractiveness:

Positive
Factor

Neutral
Factor

Negative Competitive Magnitude of Interaction Likely Role of Technology Market Size Level of
Factor Vulnerability Unmet Needs Between Growth Vulnerability Profitability
Segments


Market Opportunity Analysis Framework

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