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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
technology?7. How to craft an opportunity story?8. How to assess the market opportunitys
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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Market opportunity analysis
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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Market opportunity analysis
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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Market opportunity analysis
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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Market opportunity analysis
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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Market opportunity analysis
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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Market opportunity analysis
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
technology?7. How to craft an opportunity story?8. How to assess the market opportunitys
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
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
technology?7. How to craft an opportunity story?8. How to assess the market opportunitys
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
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
technology?7. How to craft an opportunity story?8. How to assess the market opportunitys
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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Assess competitive advantages
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Assess competitive advantages
Competitor mappingAssess competition intensity
Identify underserved and most competitive areas;
Identify current competitors strengths
Identify collaborators
Assess competitive hurdles
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Assess competitive advantages
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
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
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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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.
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Assess resource needs
Partnership: close resource gaps Complementary: Intel & Microsoft.
Capability: AOL & Associated Press.
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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
technology?7. How to craft an opportunity story?
8. How to assess the market opportunitysattractiveness?
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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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Assess technologys market readiness
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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Assess technologys market readiness
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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Assess technologys market readiness
Source: The Net Effect
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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
technology?7. How to craft an opportunity story?
8. How to assess the market opportunitysattractiveness?
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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
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
technology?7. How to craft an opportunity story?
8. How to assess the market opportunitysattractiveness?
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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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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 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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Assess opportunity's attractiveness
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_Porter7/28/2019 Session 9 to 11 - Venture Planning and Opportunity Assessment
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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/Consistent7/28/2019 Session 9 to 11 - Venture Planning and Opportunity Assessment
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Value
Creat
ion
Virt o s Circle
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Virtuous Circle
back
Horizontal Integration
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Horizontal Integration
When a company expands its business into different products that are similar
to current lines.
back
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.
back
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back