A comprehensive understanding of the marketplace is the foundation for all business decisions. Growth opportunities in any marketplace present a business with many attractive possibilities. However to make the most of the potential and to mitigate the risks, a business needs to conduct an unbiased, in-depth research. For a business to conduct a proper market opportunity assessment, it needs to focus on:
(1) Macroeconomic Analysis: To make the best of a marketplace, it is important for the business to analyze the political, economic, social, legal and technological environment to determine the potential and ease of entering a market.
(2) Market Opportunity Analysis: It is important for the business to carefully evaluate the growth drivers, market size and operational risks that will facilitate decision-making.
(3) Competitive Analysis: When the business is evaluating opportunities in a new market, it needs to assess the competitive environment to help determine the available opportunity.
(4) Customer Needs Assessment: The assessment of market place is important because it provides an insight on customer behavior and is needed to gauge customer expectations.
It is important to assess for any business if the market it is targeting is really a viable opportunity. Being able to estimate the opportunities and risks in any given market is crucial to every business decisions. The first step to assess any market is to first collect all relevant information and evaluate it to improve strategy and decision-making. Ten steps that can help assess market opportunities quick and effectively are:
- (1) The business should break the market opportunity into segments by limiting the focus the business can give a more realistic assumption about specific need for its products. Otherwise, if the focus is on a larger segment, this could lead to inaccurate assumptions and hence produce misleading results.
- (2) In order to evaluate the segment chosen properly, the business should be sure that the prospects chosen have similar needs and will value the product in the same way.
- (3) It is important to make sure that all segment criteria should be chosen carefully and hence should be externally visible.
- (4) To have the products make the greatest impact and to target a specific opportunity assessment at a later stage, it is important for the business to be sure to target the larger market segments. It will have a long run bearing on marketing and strategic decision making
- (5) A careful evaluation has to be done to estimate and validate the assumptions that have the most significant outcome. The assumptions that need to be tested are that have the ability to completely change the outlook of the assessment.
- (6) While conducting the market opportunity assessment, it is very important that a relevant timeframe is defined. Some opportunities as well as some risks are not immediately addressable.
- (7) It is important for the business to identify of any requirements or preconditions that it needs to fulfill. An opportunity can be dependent upon a law or a specific milestone set out in an ordinance.
- (8) The business needs to identify if there are any obvious and compulsory product development requirements that can impede the product launch in a particular segment immediately. In such case, the business will need to work on its product and resources.
- (9) While assessing the market, if the segment chosen has limited customers, then the evaluation will not be fully representative. It can also lead to unfair assumptions in terms of needs and value for a given product or service. Extra effort has to be made to really validate the need and potential value of these opportunities in the market.
Assessing market growth opportunities is to be done in a very disciplined fashion. This assessment helps the company determine whether to invest time or resources in attempting to capture the parts of that market. It is important to ask key questions in order to assess the market properly and to make the right decision:
- (1) What is the current size and potential size of the market? Will the market grow or will it contract in the future? If yes/no, why?
- (2) How much of the market share can a business attribute to itself conservatively?
- (3) Does our product fit into the current market? If yes, how well does our product do? If no, what can be done to create a market for the product?
- (4) What are the buying patterns in the market and how can they be exploited?
- (5) What are the different segments in the market and which one should the product compete in?
- (6) Who are the competitors in the market and what advantage do they have? What can we do as a business to get customers to buy from us?
- (7) If we are already in the market, what makes us successful or unsuccessful?
- (8) What kind of margins does the business expect from the market? How does the margins for this product align with that of the overall margins for the organization
Assessing growth potential in a market place requires common sense, critical thinking and proper analysis. Once the business is able to establish that the market is able to match the vision and goals of the business, the business should focus on specific key factors that are primarily going to help assess the market potential in its entire being.
- (1) Ability to compete: Focus on the opportunity that offers the potential for the business to compete most effectively based on a price/cost advantage. The business needs to build on its strengths to increase chances of success.
- (2) Duration of the opportunity: It is important to understand the duration of the opportunity to determine attractiveness of the market place. Also, important to understand is how long one has before competition might flood the marketplace and to prepare for it accordingly
- (3) Growth Potential: A business should always focus on long-term growth rather than immediate rewards. The growth potential has to be attractive for any business to move forward in a market.
- (4) Risks and Rewards: Risk is involved in every business and therefore it is very important for every business to evaluate the risk involved with respect to opportunity costs, time, money, physical resources, potential return on investment, etc. Also it is important for the business to assess if the rewards compensate for the risks.
It is important for any business to understand what it brings to the market and its intended customers along with a careful understanding of the markets external forces. The organizations that are able to properly assess their own capabilities along with the opportunities that the market presents are the ones that are able to succeed in the market effectively and for the long run.