Insider’s Guide to Market Opportunity Analysis
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Insider’s Guide to Market Opportunity Analysis

In the era of dynamism, it’s wise to conduct a market opportunity analysis before entering new territories, launching new products, or expanding an existing businessIt helps businesses to get an understanding of the market opportunities available. It also provides information about substitutes, competition, market size, market growth, and the value of the opportunity, among others. It helps businesses in the decision-making process of whether to proceed with the proposed project.

What is Market Opportunity Analysis?

Market opportunity analysis refers to the process of identifying and evaluating prospects for prudent investment and enhancement of market share. While running a business, you always look for new opportunities that can help the company grow and take the business to new heights. During the marketing opportunity analysis, all relevant data about the business is considered for evaluating the returns versus the risks, helping to decide whether to invest further in a market; or exit the market altogether.

Marketing research with a chosen sample size aids in exploring available opportunities. It includes assembling market research and industry reports, using public databases and trade journals, locating rivals, and comprehending audience expectations and potential risks. In other words, it’s a thorough evaluation of the potential benefits, related risks, and return expectations. With a long-term perspective, the analysis helps the business decide whether to move forward with the proposed projects.

The analysis should be conducted by decision-makers across business functions, and it is important to carry out the analysis at the right time.

The Ideal Time to Conduct Market Opportunity Analysis

Businesses must conduct a market opportunity analysis when considering expanding into new markets. Furthermore, growth opportunities will be analyzed while considering the proposed business expansion.

Exploring a New Market Entry –

It enhances the existing basket of products by launching new products. It means reaching out to retail customers for down-market entry or exploring the business-to-business (B2B) segment, viz., upmarket movement. Another option would be to enter new territories, regions, or cross-border business opportunities. You could also explore serving clients in new verticals.

Exploring Various Kinds of Growth –

The Ansoff Matrix facilitates the exploration of four types of growth opportunities:

  • Concentration: Focus remains on selling existing products to a limited client base.
  • Diversification: Entering new markets with existing products or services.
  • New product development: Creating new products or services for existing clients.
  • Penetration: Selling existing products to existing clients and acquiring new clients.

Factors Affecting Market Opportunity Analysis

Let’s understand the various factors that generally come into play when market opportunity analysis is undertaken:

Size of the Market

It’s essential to arrive at the total available market size to get an idea of the market opportunity. When the total number of existing and potential customers in the market, including those buying the same or substitute products from the competitors, is multiplied by the average revenue per customer, you get to know the market size that will continue to grow depending on demand.

Value of the Opportunity

After conducting a market opportunity analysis, the business could understand the benefits of investment. It would help to weigh the advantages and disadvantages to make an informed decision.

Technology Adoption

Businesses have migrated to modern technology to offer an efficient and seamless customer experience. Products on offer, product pricing, inquiry, placing an order, mode of transport, turn-around time (TAT), tracking delivery, and likely date of arrival of goods or delivery of services should be an online, hassle-free, and transparent process.

Competitors

A study of the products and services offered by the competitors will provide much-needed insight. Another aspect is how the products are priced and the frequency of buying the products from competitors. Such information would enable the company to focus on lucrative offerings or incorporate a unique selling proposition into the product or services.

Internal Factors Analysis

The company’s internal performance, like the high attrition rate, could affect the market opportunity. New employees will have less experience with your resources and processes, increasing the risk. Additionally, it might make the business more vulnerable to flaws in current systems, raise costs, or put off the commissioning or completion of projects. Similarly, a low attrition rate, market expertise, experience, familiarity with processes, etc., would become strengths for the company.

Michael Porter’s Five forces

These five forces refer to entry barriers, availability of substitutes, degree of competition, supplier dominance, and buyers’ power. If these forces are weaker, it provides an opportunity for new entrants and a challenge to the existing players.

Socio-Political Factors

It’s essential to keep dynamic changes taking place in the customers’ culture, preferences, expectations, and choices. During the pandemic, the work-from-home culture introduced the company to an entire market sector that didn’t exist earlier. The customer trends must be spotted in advance to take first mover advantage. Governments have also become business-friendly nowadays, offering subsidies, grants, tax holidays, and other incentives to enhance productivity. Alternatively, you may encounter regulatory hurdles that must be taken care of.

Benefits of Conducting a Market Opportunity Analysis

Market opportunity analysis helps the company gather the latest available data for making an informed decision. It enables companies to gauge the potential risks associated with projects likely to be undertaken. Such opportunity analysis reduces the risk of failure of unsuccessful or non-profitable projects.

Helpful in Taking Long-term Strategic Decisions

Market opportunity analysis provides the company with current customer expectations. It assesses markets with significant potential for expansion, where the company could service product demand profitably. Such studies, though not fool-proof, result in a future-proofing strategy.

Gain a Solid Competitive Edge

Study of competitors, product offerings, market coverage, target segment, etc., helps companies develop superior products. Customers may be able to distinguish these products from others on the market thanks to their particular selling proposition.

Change Management

The optimum use of the resources would improve the company’s productivity. A resource analysis would enable the company to redeploy under or overutilized resources to enhance project success. Another challenge is problems in supply chain management. The timely resolution of such issues would contribute to the project’s completion.

Explore New Business Opportunities

It keeps the ball rolling with its growth-oriented approach to business. It provides a conducive environment for innovating and developing products or services that meet customer demand, enhance revenue, and increase market share. A market opportunity analysis should be carried out whenever the company considers the possibility of expanding its current business, entering new markets, and developing new products.

Gauge Demand for a Product or Service

Market opportunity analysis enables companies to decide on the products or services demanded and whether to enter new markets. If demand is higher, these companies could take first mover advantage.

Associated Risks

It aids companies in recognizing potential risks and challenges related to those challenges. Anticipating challenges and possible stumbling blocks enables the company to plan accordingly and invest in feasible projects only.

Market Opportunity Analysis with Course5

Course5’s competitive intelligence solution aids Market Opportunity Assessment through a structured approach that analyzes the technological landscape, the market environment, customers and the competition, to strategically address opportunities.

Infographic - Course5's Market Opportunity Analysis Solution

We assess the current business environment, looking into current and emerging technology trends, economic conditions, social changes and the like. Having a clear definition of the industry along with forecasts for the future, reveal compelling insights and bring clarity to the outlook.

Conducting a competitor study and figuring out the target market helps to really dial down on who the ideal customers are, identify new target markets, improve product development, and build marketing strategies with actionable insights.

With our 360o approach and integrated output from multiple data sources, you have the best view of the market, customers, competition, and technology trends. Strong storyboarding capabilities and powerful visualizations assisted by smart analytics and deep domain expertise, make the competitive market intelligence easily consumable and actionable. Unmet customer needs get addressed, product development is optimized, market opportunities for entry or expansion are identified, and market strategies are laid down based on your business requirements.

Key Takeaways

To develop products with differentiated selling propositions and increase market share, market opportunity analysis is carried out for existing business expansion, diversification, market penetration, entering new markets, gathering market data, competitive product offering, and product pricing. It helps in devising long-term strategies, redeployment of the workforce, providing a competitive edge, discovering market opportunities, and mitigating associated risks with the overall objective of consistent growth of the company.