Market opportunity analysis
where will the business compete?
Learning objectives
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?
Learning objectives
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
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
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
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
Market opportunity analysis
Create More Efficient
Markets, e.g., eBay
Liberate
Trapped
Value
Enable Ease of Access,
e.g., Gap
Create More Efficient
Systems, e.g., FedEx
Disrupt Current Pricing
Power, e.g., Priceline
Look at Value
System to
Discover New
Business
Opportunities
Customize Offerings, e.g. MyYahoo
Introduce
New-tothe-World
Value
Extend Reach and Access, e.g.,
keen.com
Build Community, e.g., MyFamily.com
Enable Collaboration, e.g., ProjectPoint
Introduce New Functionality/Expertise,
e.g., C-Mode
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)
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

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
Technology
Company
Competition
Market opportunity analysis
Identify
Identify the
the Unmet
Unmet and/
and/ or
or Underserved
Underserved Customer
Customer Need
Need
Customer
Identify
Identify the
the Specific
Specific Customers
Customers aa Company
Company Will
Will Pursue
Pursue
Competition
Assess
Assess Advantage
Advantage Relative
Relative to
to Competition
Competition
Company
Assess
Assess the
the Company’s
Company’s Resources
Resources to
to Deliver
Deliver the
the Offering
Offering
Technology
Assess
Assess Market
Market Readiness
Readiness of
of Technology
Technology
Specify
Specify Opportunity
Opportunity in
in Concrete
Concrete Terms
Terms
Assess
Assess Opportunity
Opportunity Attractiveness
Attractiveness
Learning objectives
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?
Identify customer needs
Prepurchase
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
Postpurchase
Purchase
Evaluation
Purchase Decision
Satisfaction
Loyalty
Price
Quality
Purchase Online
Arrived on Time
Availability
Purchase Offline
Good Quality of Contents
Repeat Purchases
Fits Needs
Easy Buying Experience
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?
Learning objectives
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?
Identify specific customers
Market segmentation approaches: identify customers (must-haves vs nice to have)
Segmentation Type
Description
Examples - Variables
Geographic

Divides the market into different
geographical units

Country / region / city
Demographic

Divides the market on the basis
of demographic variables

Age, gender, income
Firmographic

Divides the market on the basis
of company-specific variables

Number of employees, company size
Behavioral

Divides the market based on how
customers actually buy and use
the product

Website loyalty, prior purchases
Occasion
(Situational)

Divides the market based on the
situation that leads to a product
need, purchase, or use

Routine occasion, special occasion
Psychographic

Divides the market based on
lifestyle and / or personality

Personality (laid back, type A),
lifestyle
Benefits

Divides the market based on
benefits or qualities sought from
the product

Convenience, economy, quality
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.
Learning objectives
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?
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
Assess competitive advantages
Assess competitive advantages
Competitor mapping
– Assess competition intensity
• Identify underserved and most competitive areas;
• Identify current competitors’ strengths
• Identify collaborators
– Assess competitive hurdles
Assess competitive advantages
Competitor mapping:
Target Segments
Cost-Conscious
Middle-Income
Families with
Children
High Income/Tech
Savvy
High performance level
Kodak

Disposable cameras

Low-end film and digital
cameras

No deals on developing

Mid-line cameras

Film
Canon

Limited low-end cameras

Deals on services

No services

No products

Services—developing,
sharing, gift cards

Services, though limited
 Mid-range cameras

Photo services;
developing, sharing

High-quality accessories
(film, paper, CDs)

Products are less
sophisticated
Snapfish
 No services
 High-tech products
 Software
 Printers—consumers
don’t need to process
Medium performance level
Low performance level
Learning objectives
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?
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.
Learning objectives
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?
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?
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?
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
Assess technology’s market readiness
Source: The Net Effect
Learning objectives
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?
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
Learning objectives
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?
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
Assess opportunity's attractiveness
Five attractiveness factors:
1. Unconstrained opportunity, e.g., eBay
2. Segment interaction, e.g., Zoomerang.com
3. Growth rate: 30-50% annual growth of
customer market
4. Market size, e.g., pet food and supplies market
generates $23 billion of sales
5. Profitability, e.g., profit margin at eBay’s
auction market is 80%
Assess opportunity's attractiveness
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
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

Comprehensive portfolio tracking
View Current Business and
Financial News


Place Stock Order*
Track Portfolio Performance
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
Competitive
Vulnerability
Magnitude of
Unmet Needs
Interaction
Between
Segments
Likely Role of
Growth
Technology
Vulnerability
Market Size
Level of
Profitability