Session 9 to 11 - Venture Planning and Opportunity Assessment

7/28/2019 Session 9 to 11 - Venture Planning and Opportunity Assessment

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Market opportunity analysiswhere will the business compete?


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Session 9 & 10

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 opportunitys

attractiveness?


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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


attractiveness?


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Market opportunity analysis

What? A tool to identify and assess theattractiveness of business opportunity

Why? Unique e-commerce environment:

Competition across (vs within) industry boundary

Competition between co-opetitors (vscompetitors)

Competition on speed of response

New ways to bring value to customers New ways to reconfigure value chains & value

systems


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A value chain: a set of value creatingactivities within a firm

A value system: a set of value creating

activities connecting a firm with other firmsand customers


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Considerations forvalue creation:Trapped value: efficiency, accessibility,

customer empowerment

New value: personalization, extension,community-building, collaboration

Horizontal plays: improve functional

operationsVertical plays: improve industry specific

business activities


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Look at Value

System to

Discover New

Business

Opportunities

Liberate

Trapped

Value

IntroduceNew-to-

the-World

Value

Create More EfficientMarkets, e.g., eBay

Enable Ease of Access,e.g., Gap

Customize Offerings, e.g. MyYahoo,iGoogle, Rolls Roys

Extend Reach and Access, e.g.,

keen.com, Amway

Create More EfficientSystems, e.g., FedEx

Disrupt Current PricingPower, e.g., Priceline

Build Community, e.g., MyFamily.com

Enable Collaboration, e.g., NokiaMicrosoft

Introduce New Functionality/Expertise,e.g., C-Mode, BI, Cognos, Cloud

Computing


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Questions for valuecreation: Is there a high degree of

asymmetric informationbetween buyers & sellers that

trap values? Are significant amount of time

& resources consumed inbringing people together tomake a transaction or

complete a task? Do customers view activities

as more collapsed than doindustry participants?


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How? Using a market opportunity analysis framework that revolvesaround four key elements:

Customer Analysis of the customer environment uncovers unmet or

underserved customer needs, as well as the market they occupy

Technology 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 firms offering

Competition

Analysis of the company environment provides the current state ofthe companys resourcesCompany

Analysis of the competition environment reveal the structure of theindustry and market, key competitors in the marketplace, and thefirms relative advantage to each of the key players


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Specify Opportunity in Concrete TermsSpecify Opportunity in Concrete Terms

Assess Advantage Relative to CompetitionAssess Advantage Relative to Competition

Assess the Companys Resources to Deliver the OfferingAssess the Companys Resources to Deliver the Offering

Assess Market Readiness of TechnologyAssess Market Readiness of Technology

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

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

Assess Opportunity AttractivenessAssess Opportunity Attractiveness

Customer

Technology

Competition

Company


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Learning objectives

1. What is market opportunity analysis?

2. How to identify unmet and/or underservedcustomer 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


attractiveness?


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Identify customer needs

Postpurchase

Search for AvailabilityRead Reviews Review Contents

Evaluation

Problem Recognition

Information Gathering

Purchase Decision

Satisfaction

Prepurchase

Purchase

Need for Activity/ClassGift Interested inAuthor/Subject Matter

Good Quality of ContentsArrived on Time

Loyalty

QualityPrice Availability Fits Needs

Purchase Online Purchase Offline

Easy Buying Experience

Repeat Purchases High Percentage ofConsumers Book

Purchases

The Customer Decision Process framework: analyze and discover customer needs


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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 associationsabout the buying process?

What barriers block some/all potential

customers? What are the opportunities to enhance the

customers experience?


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Learning objectives



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


attractiveness?


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Identify specific customers

Segmentation Type Description Examples - Variables

Geographic Divides the market into differentgeographical units

Country / region / city

Demographic Divides the market on the basisof demographic variables

Age, gender, income

Firmographic Divides the market on the basisof company-specific variables

Number of employees, company size

Behavioral Divides the market based on howcustomers actually buy and usethe product

Website loyalty, prior purchases

Occasion

(Situational)

Divides the market based on the

situation that leads to a productneed, purchase, or use

Routine occasion, special occasion

Psychographic Divides the market based onlifestyle and / or personality

Personality (laid back, type A),lifestyle

Benefits Divides the market based onbenefits or qualities sought fromthe product

Convenience, economy, quality

Market segmentat ion approaches: ident i fy cu stom ers (mu st-haves vs n ice to have)


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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.


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Learning objectives



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


attractiveness?


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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


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Competitor mappingAssess competition intensity

Identify underserved and most competitive areas;

Identify current competitors strengths

Identify collaborators

Assess competitive hurdles


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Target Segments Kodak Canon Snapfish

Cost-Conscious

Disposable cameras

Low-end film and digitalcameras

No deals on developing

Limited low-end cameras

No services

Deals on services

No products

Middle-IncomeFamilies withChildren

Mid-line cameras

Film

Photo services;developing, sharing

Mid-range cameras

No services

Servicesdeveloping,sharing, gift cards

High Income/TechSavvy

High-quality accessories(film, paper, CDs)

Products are lesssophisticated

High-tech products

Software

Printersconsumersdont need to process

Services, though limited

High performance level Medium performance level Low performance level

Competitor mapping:


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Learning objectives





technology?7. How to craft an opportunity story?

8. How to assess the market opportunitysattractiveness?


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Assess resource needs

Resource characteristics: central to delivering new benefits or unlocking

trapped value.

Hold the promise for winning against currentand prospective competitors.


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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.


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Partnership: close resource gaps Complementary: Intel & Microsoft.

Capability: AOL & Associated Press.


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Learning objectives








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Assess technologys 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 offeringfinancially viable?

When is the minimum penetration likely to be met?

Is there an introductory version that could be upgraded astechnology penetration increases?


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A high-level judgment on: Technological impacts

What new technologies could radically alter theeconomics of delivering an offering or require

adjustment of the actual features and functionalityof an offering?

How likely is it that your target population orcompetitors will use these technologies?


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Moores Law the processing power of successive generations

of microchips will double every 1.5 years

Gilders Law

total bandwidth of communications systems willtriple every 12 months


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Source: The Net Effect


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Learning objectives








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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 relativeadvantage over the competition

Categorize the critical capabilities (and supportingresources) as inhouse, build, buy, or collaborate

Describe how the company will capture some portion ofthe value that it creates for its customers

Provide an initial sense of the magnitude of the financialopportunity for the company


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Learning objectives








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Assess opportunity's attractiveness

What? Attractiveness = f(long-termprofitability, relative competitiveness)

How? Determine the magnitude & characterof the opportunity: Level of unmet need and the magnitude of

unconstrained opportunity

Level of interaction between major customersegments

Likely rate of growth Size/volume of the market

Level of profitability


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Five attractiveness factors:1. Unconstrained opportunity, e.g., eBay

2. Segment interaction, e.g., Zoomerang.com

3. Growth rate: 30-50% annual growth ofcustomer market

4. Market size, e.g., pet food and supplies marketgenerates $23 billion of sales

5. Profitability, e.g., profit margin at eBaysauction market is 80%


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Priceline.coms overall opportunity assessment:


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Marketwatch.com

Process Steps

View Current Business and

Financial News

Plan Investment Strategy

Place Stock Order*

Track Portfolio Performance

Tax Reporting

News constantly updated around the clock Real-time quotes Comprehensive chart data

Story behind the numbers from experienced staff

Personalized investment tools

Comprehensive portfolio tracking

Unmet and Underserved Needs

Learn About Investing

Read Analysis / Commentary

Education on investing options and strategies

Step 1: Identify unmet and underserved needs

M k h


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Marketwatch.comStep 1: Identify unmet and underserved needs

M k t t h


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Marketwatch.comStep 2: Identify specific customers

M k t t h


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Marketwatch.comStep 3: Assess competitive advantage

M k t t h


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Marketwatch.comStep 4: Assess resource needs

Customer-facing resource: brand name andCBS associations

Internal asset: in-house writers

Upstream resources: access to CBS newsoutlets & reporting resources; existingrelationships with financial institution clients

M k t t h


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Marketwatch.comStep 5: Assess technologys market readiness:

Consumers: low-bandwidth services streaming video and broadband friendly serviceshave to wait

Advertisers: receptive to alternative onlineadvertising placements make technologyinvestment accordingly

Licensees: seamlessly integrate modularized

content into their sites

ensure scalability of itstechnology to meet increasing licensingdemands

M k t t h


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Marketwatch.comStep 6: Craft an opportunity story:

M k t t h


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Marketwatch.com

Competitive

Vulnerability

Magnitude of

Unmet Needs

Interaction

Between

Segments

Likely Role of

Growth

Technology

Vulnerability

Market Size Level of

Profitability

NeutralFactor

PositiveFactor

NegativeFactor

Step 7: Assess opportunitys attractiveness:

Objective: Have a brand reach in Global


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Objective: Have a brand reach in GlobalMarketplace Chap. UAE

1. Data Potential Reach & Range

(Product) No. Comp. Market share

2. Demand: Total Market Size Market

Opportunity Analysis Market Eq. Vs.Brand Eq. DMAIC

3. Opportunity Validation: DMADV

Feasibility Study Business Plan4. Strategy Making: Strategy Maps using

BSC, Product positioning Strategy &

Marketing Strategy

V l Ch i


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Value Chain

The value chain, is a concept from business management that was

first described and popularized by Michael Porterin his 1985 best-seller, Competitive Advantage: Creating and Sustaining SuperiorPerformance.

A value chain is a chain of activities for a firm operating in a specificindustry. The business unit is the appropriate level for construction

of a value chain, not the divisional level or corporate level. Productspass through all activities of the chain in order, and at each activitythe product gains some value. The chain of activities gives theproducts more added value than the sum of the independentactivity's value. It is important not to mix the concept of the value

chain with the costs occurring throughout the activities. A diamondcutter, as a profession, can be used to illustrate the difference ofcost and the value chain. The cutting activity may have a low cost,but the activity adds much of the value to the end product, since arough diamond is significantly less valuable than a cut diamond.

Mi h l P t 5 f V l Ch i d l
http://en.wikipedia.org/wiki/Michael_Porterhttp://en.wikipedia.org/wiki/Diamond_cutterhttp://en.wikipedia.org/wiki/Diamond_cutterhttp://en.wikipedia.org/wiki/Diamond_cutterhttp://en.wikipedia.org/wiki/Diamond_cutterhttp://en.wikipedia.org/wiki/Michael_Porter


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Michael Porters 5 force Value Chain model

V l S t


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Value System

A value system is a set ofconsistentethicvalues (more specifically the personal andcultural values) and measures used for thepurpose ofethical orideological integrity.

A well defined value system is a moralcode

Personal, Communal and Corporate Value

systems
http://en.wikipedia.org/wiki/Consistenthttp://en.wikipedia.org/wiki/Ethic_valueshttp://en.wikipedia.org/wiki/Ethic_valueshttp://en.wikipedia.org/wiki/Personal_and_cultural_valueshttp://en.wikipedia.org/wiki/Personal_and_cultural_valueshttp://en.wikipedia.org/wiki/Ethicalhttp://en.wikipedia.org/wiki/Integrityhttp://en.wikipedia.org/wiki/Moral_codehttp://en.wikipedia.org/wiki/Moral_codehttp://en.wikipedia.org/wiki/Moral_codehttp://en.wikipedia.org/wiki/Moral_codehttp://en.wikipedia.org/wiki/Integrityhttp://en.wikipedia.org/wiki/Ethicalhttp://en.wikipedia.org/wiki/Personal_and_cultural_valueshttp://en.wikipedia.org/wiki/Personal_and_cultural_valueshttp://en.wikipedia.org/wiki/Ethic_valueshttp://en.wikipedia.org/wiki/Ethic_valueshttp://en.wikipedia.org/wiki/Consistent


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Value

Creat

ion

Virt o s Circle


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Virtuous Circle

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Horizontal Integration


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Horizontal Integration

When a company expands its business into different products that are similar

to current lines.

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Vertical Integration


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Vertical Integration

When a company expands its

business into areas that are atdifferent points of the sameproduction path.

A car company thatexpands into tire

manufacturing

Vert ical in tegrat ion is th e

process in wh ich several steps

in the produ ct ion and/or

dis t r ibut ion of a product or

serv ice are contro l led by a

sing le com pany or ent i ty , in

order to increase that

companys or entitys power in

the m arketplace.

Types of Vertical Integrations:

There are basically 3 classifications ofVertical Integration namely:

Backward integration The examplediscussed above where in the companytries to own an input product company.

Like a car company owning a companywhich makes tires.Forward integration Where thebusiness tries to control the postproduction areas, namely the distributionnetwork. Like a mobile company opening

its own Mobile retail chain.Balanced integration You guessed itright, a mix of the above two. A balancedstrategy to take advantages of both theworlds.

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Session 9 to 11 - Venture Planning and Opportunity Assessment

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