Market Opportunity Recognition
www.bradford.ac.uk/management
Definitions
Creativity
Characterized by originality and expressiveness;
imaginative
Imagination
The formation of a mental image of something that is
neither perceived as real nor present to the senses.
Idea
Something, such as a thought or conception, that
potentially or actually exists in the mind as a product
of mental activity.
Opportunity
A favourable or advantageous circumstance or
combination of circumstances.
Imagination is
more important
than
knowledge…
Albert Einstein
(1879-1955)
Creative v Logical Thinking
Creative
Seeks questions
Diverges
Explores different views
Restructures
Logical
Seeks answers
Converges
Asserts best or right view
Using existing structure
Seeks ways an idea might help
Says when an idea will not work
Welcomes discontinuous leaps
Uses logical steps
Welcomes chance intrusions
Open ended
Focuses on what is relevant
Closed
Innovation
Is the process by which entrepreneurs convert
opportunities into marketable ideas. It is the means by
which they become catalysts for change.
•New Product
•New method of doing the same product
•New Source of Raw materials
•New Market
•New way of organising your business
“The single biggest
cause of failure is
not lack of money
but that you haven’t
come up with
something that the
world wants.”
Larry C.Farrell
Conception + Invention + Exploitation
Drucker’s Sources of Innovative Opportunity
• The unexpected. Success IBM. Failure Jacket Potatoes
• The incongruity. Possible v Actual. Overnight Delivery.
• Process needs. Sugar free products. Caffeine free.
• Changes in industry/market structure. Digital Cameras
PLUS
• Demographic changes. Age profile
• Changes in perception, mood or meaning. Fashion
• New knowledge. Mobile phones.
Types of Innovation
• INVENTION - totally new, product or service
[Airplane, Light bulb, Telephone]
• EXTENSION – New use or different application of
existing product or service [McDonalds, Holiday Inn]
• DUPLICATION – Creative replication of an existing
concept [Pizza Hut, Virgin]
• SYNTHESIS – Combining into a new formulation
[Internet Cafes]
HBDI Herrmann Brain Dominance Instrument
What is an Opportunity?
• Opportunity Defined
– An opportunity is a favorable set of circumstances
that creates the need for a new product, service, or
business idea.
– Most entrepreneurial firms are started in one of two
ways:
• Some firms are internally stimulated. An entrepreneur
decides to start a firm, searches for and recognizes an
opportunity, then starts a business.
• Other firms are externally stimulated. An entrepreneur
recognizes a problem or an opportunity gap and creates a
business to fill it.
What is an Opportunity?
An opportunity has four essential qualities
Window of Opportunity & Life Cycle
$100M
$50M
$25M
$3M
$1M
Start up
High
Growth
Maturity
Time (years)
Stability
Three Classic Life Cycles
500
In $Millions
High potential firm
100
Foundation firm
25
5
1
Lifestyle firm
1
2
3
4
5
6
7
Years
8
9
10
Three Ways to Identify An Opportunity
Observing Trends
First Approach: Observing Trends
Environmental Trends Suggesting Business or Product Opportunity Gaps
Environmental Scanning
Scanning:
Detect Changes
Monitoring:
Track Events Affecting Business
Forecasting: Making Plausible Projections
Assessing:
‘What does it all mean?’
Trend Analysis
• Trends identify emerging needs..
• SEEDTIP analysis
–
–
–
–
–
–
–
Societal/sociological trends
Economic trends
Environmental/Ecological trends
Demographic trends
Technological trends
International trends
Political/Legal trends
[Café society]
[Life coaches]
[Ecotourism]
[In home care]
[VOIP]
[China/India emerging]
[Health & Safety]
• When two or more trends come together…
http://www.trendhunter.com/trends/interactive-wallpaper-sl2010-allyearlong-calendar
http://www.springwise.com/
Exploit trends
• 24 hour society
• ‘Money rich, time poor’
• Demographic change: age, urban
living, growth patterns
• Environmental issues
• Globalisation
• Legislation
• Desire for ‘gadgets’
• Communication
Solving a Problem
Second Approach: Solving a Problem
Sometimes identifying
opportunities simply
involves noticing a problem
and finding a way to
solve it.
These problems can be
pinpointed through observing
trends and through more simple
means, such as intuition,
serendipity, or chance.
Some business ideas are clearly
initiated to solve a problem.
For example, Symantec Corp.
created Norton antivirus
software to guard computers
against viruses.
Solving a Problem
Businesses Created to Solve a Problem
How entrepreneurs found ideas
• Left xmas shopping too late, couldn’t find last minute
gadgets GADGET SHOP
• Market opportunity to sell mobile phones direct
CAR PHONE WAREHOUSE
• Wife crying because of seven days wait for new glasses
VISION EXPRESS
• Passion for making scents and lotions turned into
JO MALONE
Create Curiosity – Open Mind & Observation of Circumstances
Finding Gaps in the Marketplace
Third Approach: Finding Gaps in the Marketplace
• Gaps in the Marketplace
– A third approach to identifying opportunities is to
find a gap in the marketplace.
– A gap in the marketplace is often created when
a product or service is needed by a specific
group of people but doesn’t represent a large
enough market to be of interest to mainstream
retailers or manufacturers.
• This is the reason that small clothing boutiques and
specialty shops exist.
• The small boutiques, which often sell designer clothes
or clothing for hard-to-fit people, are willing to carry
merchandise that doesn’t sell in large enough
quantities for Wal-Mart, GAP, or JC Penney to carry.
Personal Characteristics of the Entrepreneur
Characteristics that tend to make some people
better at recognizing opportunities than others
Prior Experience
Social Networks
Cognitive Factors
Creativity
Social Capital - Per Lovgren
Management
Consultants
Foundry
Consultants
Network of
Professors of
Engineering
Network of
Management
Consultants
Birley & Muzyka (2000:45)
Who Do You Know?
Tutors
Advisors
Work
Colleagues
Professional
Contacts
Family
YOU
Friends
Other
Students
Staff
Sources Of Ideas
– Insights - experience in profession or industry
43%
–
–
–
–
–
15%
11%
7%
5%
3%
Challenge - could do better
Unfilled/overlooked niche in marketplace
Systematic search for business opportunities
Brainstorm - cannot explain it
Hobby or vocational interest
Source: Entrepreneurship, John G Burch
Unlocking Value
Ideas
Personality
Motivation & Drivers
Ability to Learn
Capabilities
Unlocking
Personal Value
Opportunities
Know How & Expertise
Relationships & Contacts
Ventures
Rae (1999)
What Kind of Business Should I Start?
•
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•
•
•
•
•
•
•
Start with what you know.
Do what you love.
Don’t reinvent the wheel, just make it better
Focus on a niche
Consider the franchising option
Know what sets you apart from the competition
Imitate an existing product
Buy an existing business
Become and agent or distributor
Sell your services as a consultant
More…?
• Above all take your time
Source: entrepreneur.com