nd
Mohammed, Fisher, Jaworski, Paddison
Copyright © 2003 by Marketspace LLC

Framing the Market Opportunity — Today’s Objectives
Objectives will be to:
 Introduce the market opportunity analytic framework
 Examine three basic value-types
 Discuss the identification of unmet and under-served needs
 Explore how customers are segmented and targeted
 Examine the role of resources in evaluating market opportunities
 Discuss how to assess the attractiveness of a market opportunity

Examine eBay’s market opportunity
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Exhibit 2 –1: Framework for Market Opportunity
Determining where and how a business will compete
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Exhibit 2 –2: Three Types of Basic Value
Trapped Value New-to-the-World Value
 More efficient markets
 More efficient value systems
 Disrupt pricing
 Ease access
 Radically extend reach
 Customize offerings
 Build community
 Introduce new functionality or experience
Hybrid Value
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Supporting Slide 2 –A:
Exploring Basic Value
Trapped Value
More efficient markets lower search and transaction costs
• Bizbuyer.com
• Lending Tree Inc.
• CircleLending
More efficient value systems compress or eliminate steps in an existing value system
• General Electric
Hybrid Value
Disrupt pricing and change pricing-power relationships
• MySimon.com
Enable ease of access and help customers find products
• Abebooks.com
Extend reach and welcome distant customers
• Distance education
New-to-the-World Value
Customizing offerings allows customers to add and remove features
• Yahoo
• Quicken.com
Build communities to leverage customers’ participation
• Zeal.com
Introduce new functionality to transform all or part of an industry value chain
• Internet telephony
• Digital photography
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –B:
Pinpointing Value
Consider horizontal and vertical dimensions
 Horizontal value plays improve functional operations that are common to multiple industries and types of value systems
– “We’re really good at managing retail operations”
– GE (planning and control), eBay (on-line auctions)
 Vertical value plays create value within activities that are central to a particular business
– “We know everything there is to know about oil, from drilling to pumping gas”
– Covisint (an online consortium, which facilitates transactions of materials for the automotive supply chain)
Look for clues to trapped value
 Asymmetric information
 Poor access to information and advice


Significant time and resources
Low collaboration between key participants
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Supporting Slide 2 –C:
Customer Decision Process
A framework to help managers look systematically for unmet or underserved needs
Origination What prompts the customer to action?
Prepurchase
Information
Gathering
What factors influence the customer’s decision?
Evaluation
What attributes of the product does the customer consider?
Because value creation is based on understanding and meeting customer needs.
Purchase
Purchase
Decision
What options does the customer identify?
What decision(s) does he make?
Postpurchase
Postpurchase
Evaluation and
Behavior
What does the customer do about his decision?
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –3: Decision for Purchasing a Camera
Origination Personal use
Prepurchase
Information gathering
Evaluation
Gift
Features
Complexity
Type
(digital/film)
Usage occasions
Reviews
Cost
Brand/ manufacturer
Past experiences
Budget constraints
Purchase
Purchase decision
Postpurchase
Postpurchase evaluation and behavior
Film
35mm APS Basic
Digital
Fully loaded
Instant
Throwaway
Standard
Body type
SLR
Point & shoot
Zoom
Lens
Fixed
Print quality Reliability
Learning curve/ ease of use
Likelihood of repeat purchase or recommendation
Range of accessories
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –D:
Decision for Vacation Travel Destination
Origination
Prepurchase
Information
Gathering
Event
Holiday
Honeymoon
Reunion
Number and
Relationship of
Travelers
Budget
Duration and
Distance
Purchase
Evaluation
Purchase
Decision
Break
Activities Weather
Travel Agent
Books Brochures
Chat rooms
Vacation
Package
Travel Guides
Independently
Planned
Past
Experiences
World Tour Cruise
Small-Town
Discovery
Beach Escape
Outdoor
Adventure
Comfort Style Photos
Degree of
Memorability
Postpurchase
Postpurchase
Evaluation and
Behavior
Likelihood of Repeat or Referral
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –E:
Using the Customer Decision Map
Some questions to consider

What is the nature of the customer’s ideal experience? How does it vary through the stages of decision-making?

How closely does the actual experience compare to the customer’s view of the ideal? What are the key frustration points?

Does the customer’s experience yield the result that best meets his needs?
What might help the customer achieve better results?
 Does the desired customer experience vary?
 What are customer beliefs about the decision-making process and the options available for purchase?
 What barriers block participation by potential customers?
 What technological, communication or online opportunities might enhance the customer experience?
 How do customers define value for critical steps in the process? Would they be willing to pay for certain elements of that value?
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Supporting Slide 2 –F:
Designing a Value Cluster
Choice of target
Value
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –4: Segmentation Approaches
Grouping customers into useful categories
Segmentation Type Description
Geographics
Demographics
Firmographics
Behavioral
Occasion (situational)
Psychographics
Benefits
Examples of variables
Divides market into geographic units Country, region, city
Divides market based on demographic values
Age, gender, income, education
Divides market based on companyspecific variables
Divides market based on benefits or qualities sought from the product
Number of employees, company size
Divides market based on how customers buy and use the product
Divides market based on lifestyle and/or personality
Website loyalty, prior purchases
Divides market based on the situation that leads to a product need, purchase, or use
Routine occasion, special occasion, part of day
Personality (laid-back, type A), lifestyle
Convenience, economy, quality
Last Updated: 04/10/03
Copyright
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2003 by Marketspace LLC

Supporting Slide 2 –G:
Geographic Segmentation
Description
 Geographic segmentation divides the market into distinct geographical units, such as nations, states or regions
 In the Internet space, geographic barriers are to a large extent lifted
 However, there still are many industries where local relationships and distribution channels play a key role, maintaining the need for a local focus
– Grocery-delivery service Peapod is currently operating in several metropolitan markets; entry into new geographical markets will require the building of the necessary homedelivery infrastructure
– Many construction sites have a local or regional focus, since relationships with local or regional contractors and suppliers are of critical importance
Segmentation
Examples
 Country
 Region
 Urban vs. Rural
 Density
 Climate
Source: Philip Kotler, Marketing Management (1997), p. 257
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –H:
Geographic Segmentation Example — Citysearch.com
Citysearch.com
“Where to go, what to do, how to get things done . . . in your city”
 Citysearch.com is a leading local portal and transactions company, providing content and services in select popular cities in the US and slowly expanding to international cities
 Citysearch provides complete city guides for 128 cities worldwide

Citysearch’s offering includes:
– Movie listings
– Shopping
– Restaurant reviews
– Ticket purchases
– Yellow pages
– City exploration
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –I:
Demographic Segmentation
B2C:
Demographic
Description
 Market division into groups based on customer demographic variables
 Most popular method for distinguishing customer groups, highly actionable
Segmentation
Examples
 Age
 Income
 Occupation
 Nationality
B2B:
Firmographic
 Market division into groups based on business demographic variables
 Highly actionable, since business demographic data is readily available
 Industry
 Company size
 Location
Source: Philip Kotler, Marketing Management (1997), p. 258
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –J:
Needs-Based Segmentation
 Consumers and businesses purchase goods and services because they satisfy their needs
– The same product may satisfy many different needs; a person may purchase chewing gum in order to freshen her breath, to promote dental health, to help her quit smoking or because she enjoys the taste
 Needs-based segmentation seeks to understand why a purchase is made
(i.e., what needs are being satisfied) and to divide the market into groups of buyers whose needs are homogenous
 Needs-based segmentations are particularly compelling for technology companies; they can prevent companies from developing new technology features because they are “cool” or just because they are possible
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –K:
Requirements of an Effective Segmentation
In order for a customer segmentation to be effective, it must be meaningful, actionable, substantial and measurable
Meaningful
 Customers must demonstrate needs, aspirations or behavioral patterns that are similar within a segment and different across segments
–
A distinction between a price-sensitive and a quality-seeking segment is meaningful, since the two segments demonstrate distinguishable sets of needs
Actionable
 A company must be able to reach customers within each segment through effective and targeted marketing programs
– A customer segment consisting of customers with blue eyes is not actionable, since it is very hard to identify and reach only customers with blue eyes
Substantial
 Segments must be large and profitable enough to make the investment in serving them worthwhile
– MyCFO.com is targeted toward high-net-worth individuals, helping them manage their portfolios; even though the number of those individuals is small, the dollar amount managed is sizeable, thus constituting a substantial segment
 Key characteristics of the segments (e.g., size and spending patterns) must be easy to measure
Measurable
Source: Philip Kotler, Marketing Management (1997), p. 269
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –L:
Segmentation Examples
Select actionable, meaningful bases for segmentation

Children’s Toys
– Relationship to purchaser (e.g. self, peer, parent)
– Age of purchaser
– Reason for purchase (e.g. entertain, reward, educate)
 Online Trading
– Value of stock portfolio
– Frequency of trades
 Internet Service Providers
– Age of purchaser
– History of Internet use
– Primary online activities
For each segment defined, how might you locate the customer?
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –M:
Choice of Focal Customer Benefits
Selecting a relevant, important and parsimonious benefit
Three classes of considerations for assessing the value proposition
Customer Criteria Company Criteria Competitor Criteria
 Do target customers understand the value proposition?
 Is the value relevant to the target customers’ needs?
 Do target customers believe the value proposition?
 Will the value proposition provoke customer action?
 Will the company support the proposition?
 Does the company have the resources and capabilities to “own” the proposition?
 Does selection of the proposition limit future growth into other markets?
 Are competitors trying to provide a similar value proposition?
 Do current competitors have the resources and capabilities to copy the proposition?
 How easy is it for the required resources and capabilities to be developed?
Caution: Compromising two benefits is less valuable than fully delivering one.
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –5: Segmentation Variables
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –6: Consumer Digital Camera Purchasing Segmentation
Computer experience and age
Purchase occasion
Self-consumption
Professional Hobbyist
Familyfocused
40+
Professional
Gift
Hobbyist
Familyfocused
Expert user
22-39

21
No significant market
40+
Functional user
22-39

21
40+
Illiterate 22-39

21
No significant market
No significant market
Basic digital camera
Intermediate digital camera
No significant market
Fully loaded digital camera
Last Updated: 04/10/03
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2003 by Marketspace LLC

Supporting Slide 2 –N: Point-Counterpoint:
Does Segmentation Matter in the Online World?
Segmentation Is Irrelevant Segmentation Matters

Everything can be customized for each individual customer

Good Web businesses attract customers from all segments — it doesn’t make sense to treat them the same way

Back-office supply systems and infrastructure can easily accommodate every type of customer — why limit it to a few segments?

Multiple storefronts, like those of Amazon.com, can be constructed in a real-time basis.

Segmentation happens, whether intentional or not.

Segmentation is needed to help companies identify which classes of customer are profitable and unprofitable.
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –7: Amazon.com Homepage for Two Different Customers
The display is personalized for each customer.
Recommendations are based on the individual’s past purchases.
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Supporting Slide 2 –O:
Specifying a Resource System
The resource system shows how a company must align its internal systems and partners to deliver the benefits of the value proposition or cluster. The construction of a resource system occurs in five steps:
Identify core benefits in the value proposition or cluster
Identify capabilities that relate to each benefit
Link resources to each capability
Identify to what extent the firm can deliver each capability
Identify partners who can complete capabilities
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Supporting Slide 2 –P:
Evaluating a Resource System
Making sure the company’s systems and partners are aligned with the value proposition
Uniqueness
 Good resource systems provide benefits, capabilities and activities that are different from those of competitors
Links

Good resource systems have links between capabilities and benefits, among capabilities, among resources, and between virtual-world and physical-world business systems
Sustainability
 Good resource systems are difficult for competitors to replicate
Source: Philip Kotler, Marketing Management (1997), p. 269
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Supporting Slide 2 –R:
Factors of Opportunity Attractiveness
Criteria for making a go / no-go assessment
Competitive
Intensity
Customer
Dynamics
Technology
Vulnerability


Competitive vulnerability measures the number and identity of competitors and their respective strengths and weaknesses at delivering benefits
Technical vulnerability considers the ease of competitive duplication



Magnitude of unmet need measures the amount of ‘white space’ apparent in the marketplace
Interaction between segments measures the level of reinforcing activity that generates more purchase and usage.
Likely rate of growth estimates annual growth of underlying customer-unit market
– E.g. Fast-growing small-business market


Technology adoption measures customers’ adoption of the technologies required to recognize the value of the offering
Impact of new technologies considers the likelihood of a new technology radically altering the economics or attractiveness of the offering
Microeconomics


Market size is the dollar value of all sales generated in a particular market
Profitability is the profit margin that can be realized in the market
Source: Philip Kotler, Marketing Management (1997), p. 269
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –8: Competitor Profiling—Eastman Kodak
Identifying competitors for each activity of the business
• Intel
• Olympus
• Snapfish • Fuji
Purchase accessories
Purchase camera
Purchase film
• Moto
Photo
• Yahoo
Photos
Store pictures on CD
Share pictures
• Photoworks
Eastman Kodak
Print and receive pictures
Take pictures
Direct
Competition
Download and choose pictures to print
Digitally manipulate pictures
• Adobe
Systems
• Shutterfly
• Geocities
• Snapfish • Ofoto
Indirect
Competition
• HP
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –9: Calculation of Per-Household Consumer Film Revenue
Kodak stands to lose as much as 50% of its film revenue in a fully digital photography world
# Photos Taken
# Film Photos Developed
# Digital Photos Developed
Revenue/Film Print
Film Print Revenue
Film Revenue
Revenue/Digital Print
Digital Print Revenue
Total Revenue per Household
% Profit Loss v. Film only
Traditional
Film
100
100
0
$0.37
$37.46
$17.00
$0.50
$0.00
$54.46
0%
Film +
Digital
160
67
18
$0.37
$25.10
$11.39
$0.50
$9.00
$45.49
16%
Fully Digital
300
0
54
$0.37
$0.00
$0.00
$0.50
$27.00
Key Assumptions
 For easy comparison, assume
100-photo base for average family.
 Revenue/Film Print assumes $8.99 per
24 exposures.
 Revenue/Digital
Print assumes 50 cents per exposure.
 Film revenue assumes $3.99 for
24 exposures.
 Families with digital cameras take 60% more pictures, but take 33% fewer film photographs.
 Only 20% of digital photos taken are developed.
$27.00
50%
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –10: Photography Value Chain
Capture
Store and
Retrieve
Enhance Repurpose Share
Film Value
Chain: Products and services
Virtual Value
Chain: Products and services
• Still cameras
• Film
• Batteries
• Commercial processing
• Negatives
• Commercial
Processing
• PictureMaker
Kiosks
• Commercial processing
• PictureMaker kiosks
• Reprints
• Albums
• Digital cameras
• Webcams
• PDA cameras
• Memory sticks
• Flash cards
• CDs
• PC hard drive
• Home inkjet printer
• Inkjet paper
• Inkjet ink
• Commercial processing
• Online upload and development
• PDA
• Commercial processing
• PC software
• Online software
• PictureMaker kiosks
• Commercial processing
• PC software
• Online software
• PictureMaker kiosks
• Reprints (online services, printers)
• Online albums
• E-mail
• Diskettes
• Flash cards
• Memory sticks
• PDA
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –11: Notable Kodak Investments and Partnerships, 2000-2001
Cameras and
Scanners
• Development of
EasyShare digital camera technology
• License of
EasyShare technology to
Olympus
• Investment in
PictureVision scanners and servers
Online
Partnerships
Storage
Solutions
• Ofoto.com acquisition
• Snapfish.com investment
• AOL “You’ve Got
Pictures” partnership
• PhotoAlley.com investment
• iFilm.com investment
• MyFamily.com investment
• Partnership with
CVS.com and Kmart photofinishing
• Partnership with
Circuit City for creating and sharing prints
• Partnership with
Freeserve, largest
ISP in the UK
• DataPlay partnership for lowcost storage devices
• LSI Logic photo
CDs via DVD players
Printing
Solutions
• Lexmark partnership for home printers
• Encad acquisition for inkjet printers
Commercial
Printing
• HP JV for commercial digital inkjet minilabs
(Phogenix)
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –12: Kodak’s Digital Photography Overall Opportunity
Assessment
Positive factor
Neutral factor
Negative factor
Competitive vulnerability
Technical vulnerability
Magnitude of unmet need
Interaction between segments
Likely rate of growth
Technological vulnerability
Market size
Level of profitability
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Exhibit 2 –13: EBay’s Financial Growth
500
Millions of dollars
400
300
200
100
0
800
700
600
41
Net revenue
Gross profit
32
1997
86
1998
70
224
167
1999
431
2000
335
748
2001
614
Last Updated: 04/10/03
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
2003 by Marketspace LLC
Source: EBay Annual Report

Exhibit 2 –14: Market Share — EBay Controls Majority Share of Total Online
Auction Revenue
Egghead
5% uBid
17%
Yahoo
3%
Amazon
2% eBay
73%
Last Updated: 04/10/03
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2003 by Marketspace LLC
Source: Nielsen/Net Ratings

Exhibit 2 –15: EBay — Defining the Value System
Value Type
Trapped
Hybrid
New
How
Create more efficient markets
Create more efficient value systems
Disrupt market pricing
Enable ease of access
Radically extend reach
Customize offerings
Enable community building
Introduce new functionality or experience
Extent
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –16: EBay — Unmet and Underserved Needs
Customer’s Unmet and Underserved
Traditional Auction Process Needs
Seller
Auction House /
Dealer
Buyer
Realize he or she would like to sell something
Like to browse or have a specific interest or need
 Notification of when specific items are being sold
Research the value of the item and a possible channel for exchange
Choose exchange agent and negotiate terms
Deliver merchandise
Establish and agree to selling / buying process
Set auction schedule and choose venue
Research venues / channels for procurement


Easy channel / venue access
Objective listing agent
Choose procurement channel



Passive search and decision process
Easy listing process and objectives
Ability to list modestly priced items
Determine appropriate schedules and locations


Improved availability and access
Simplified shipping; elimination of two-stage process
Hold auction Attend auction
Conduct preliminary research on items
Bid
 Time to conduct due-diligence research on items
 Time to think about purchase
Receive payment
Win?
Receive payment
Take commission and fee
Pass a percentage of proceeds to seller
Pay 
Receive merchandise
 Reasonable agent fees

Ease of payment
Minimized time lag between merchandise surrender and compensation
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –17: EBay Buyer Potential
Identifying key customer segments
User
Demographics
Promotional
Behavior

39
High
Income
40+
Very High
Active deal makers with means
History of Responding to Promotions
High Moderate Limited

39
Active frugal collectors
None
Passive collectors
 Ease
 Convenience
Moderate
Income
40+ Active frugal collectors

39
Limited
Income
Top Priority
40+
Secondary
Priority
Tertiary
Priority
Price-sensitive
Limited accessibility or options
Last Updated: 04/10/03
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2003 by Marketspace LLC

Exhibit 2 –18: EBay Overall Opportunity Assessment
Positive factor
Neutral factor
Negative factor
Competitive vulnerability
Magnitude of unmet need
Interaction between segments
Likely rate of growth
Technological vulnerability
Market size
Level of profitability
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Chapter 2:
Framing the Market Opportunity
 The Market Opportunity Analytic Framework
 Three Basic Value Types — Trapped Value, New-to-the-World Value and
Hybrid Value
 The Use of the Customer Decision Process to Identify Unmet and
Underserved Needs
 Segmentation and Targeting
 The Role of Resources in Evaluating Market Opportunity
 Assessing the Attractiveness of a Market Opportunity

EBay’s Market Opportunity
 Conclusion
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC

Framing the Market Opportunity — Conclusion
 A firm needs to follow a rigorous approach to correctly isolate market opportunities — the market opportunity analysis framework is a six-stage process that addresses this need
 The six stages of the framework are: 1) investigate opportunity in an existing or new value system, 2) identify and choose priority customer segments, 3) determine target customer segments, 4) assess resource requirements to deliver the offering, 5) assess competitive, technological and financial attractiveness of opportunity and 6) conduct a go / no-go assessment
 In assessing the attractiveness of an opportunity, four dimensions should also be considered: 1) competitive intensity, 2) customer dynamics (e.g., unmet needs, likely rate of growth, etc.), 3) technological vulnerability and 4) microeconomics (industry size and profitability)
Last Updated: 04/10/03
Copyright

2003 by Marketspace LLC