Columns

Big Ideas for Small Business Managers : Explore virgin territories to discover opportunities hidden

06 Jul 2015 - {{hitsCtrl.values.hits}}

We are now moving into section two -- marketing opportunities/targets of opportunity of the tactical plan (year - one) of the major business plan. To begin, let us define what is meant by market opportunity.

A market opportunity is a newly identified need, want, or demand trend that a company can exploit because it is not being addressed by the competitors.

Finding the new need
We can think of a new need in two ways: it is either a problem not currently solved or it is a potential for a change in consumption.

A problem may or may not be understood by the potential customer but may be observable from how the potential customer does certain things. A potential for a change in consumption may be due to changing demographics, tastes, hopes, fears, etc. It may also be due to changes or new developments in knowledge, technology, laws or patterns of behaviour (in business or in other spheres).

Therefore, there is no easy or straight path to identifying a market opportunity. It is rarely the case that you can ask a potential customer a simple question and get the answer you are looking for. It takes a great deal of thought and care to devise an approach to finding a real market opportunity.

You should try to discover what it is about this consumer or this environment that gives this need its importance (or lack of importance). You should try to understand what would have to change if the consumer were to adopt a solution to this need. Ultimately, you should come away from some of these conversations with a conviction, based on solid evidence, that this consumer would pay a reasonable amount of money and invest a reasonable amount of energy for a solution to the need you have identified.

Quantifying the opportunity
Quantifying a market opportunity is simply a matter of estimating the number of consumers who have the need that you have identified and also estimating the adoption through time of the consumers in question. Your revenue projections are simply the share of this opportunity you can reasonably expect to capture over some planning horizon. Although the problem can be described simply and only a few numbers are involved, this is an extraordinarily difficult task.

Although there is a strong tendency to start with reports and large numbers, you should resist this temptation until your primary market research has become sufficiently robust that you actually know what numbers might be relevant.

Process
You should keep in mind that your market sizing is a process of counting potential consumers. You should start with a few and proceed on. As you understand your prospective customers, you form a possibility about what it is about them that would make them invest in a solution to the need. You should test your hypothesis on other consumers who share these attributes. This is the process of developing a consumer profile. Once you have a reasonably good guess, then you can look to reports and other sources of data to generalize from your customer profile to an actual market potential.
Even if you do this work very carefully and very diligently, it is still unreliable data. It is often very useful to think of the market opportunity as a range. This will be very useful in being prepared both for the up-side and for the down-side potential of your opportunity.

Obstacles
Even if you have found a new need, you may not always have a market opportunity that can be exploited. There may be alternatives available to potential customers that have advantages over any solution that you may offer. And even if there are no alternatives, there may be other issues that would prevent a customer from buying a solution that you propose. There may be prejudices that get in the way, there may be others whose opinions will thwart your efforts, the decision process may be unmanageable, etc., etc. These are issues that should never be far from your mind as you conduct your market research.
The following screening process would help to identify your major opportunities and challenges. Once you identify and prioritise the opportunities, convert them into objectives and tactics.

Environment: What is the potential customer’s current environment? Here you should describe a set of behaviours or processes that exist among a set of individuals or organisations. What is the goal or intended outcome of the processes? What else do these behaviours relate to?

Need/problem: What is the need or problem that you observe? Characterize it in as much depth and detail as you can.

Potential customers: Characterize the class of people or organisations that have the need or problem that you identify. What are the key characteristics that make them have this need/problem?

Examples: Describe some cases that support your hypothesis.

Segments: Are there important differences among potential customers (i.e., relative to the need/problem you have identified)? Is there a basis for classifying potential customers?

Value: How severe or acute is the need or problem you have identified? Is the need/problem readily identified by potential customers (i.e., do they recognize that they have it)? What would be the basis for articulating (or quantifying) a value of a solution?

Buying process: How would a potential customer buy a solution? Who makes the decision? Do others need to approve? Who influences the decision? Is there a budgeting process? How long does this take? Can you control your own destiny or do channel partner own the customer relation?

Value chain: How would a solution to the identified need/problem relate to other products and services? Would a solution be acquired as a completely independent decision or would complementary products or services be required? If the latter, who supplies these products and services? How would they be integrated with your proposed solution? Who would perform this integration? Is any part of the value chain characterized by monopoly or highly concentrated power? If so, how does your proposed solution align with the powerful firms?

Obstacles: What are the major barriers or obstacles to the purchase and use of a solution to the identified need or problem? Would a solution be disruptive in any way? Are there people whose roles would be threatened? Are there relationships that would be threatened? Are you relying on other nascent industries and/or products or technologies to be adopted?

Preliminary sizing: How many organisations or individuals have the need/problem you have identified? If relevant, how pervasive is the need within an organisation? Are there issues of penetration or frequency of use? Can you translate this information into a preliminary market sizing? What are the assumptions and logic behind that translation?

Identify the second bounce of the ball: ‘The Second Bounce of the Ball’ by Sir Ronald Cohen is a book all about identifying market opportunities before they become obvious trends. If you can identify “the second bounce of the ball”, you may be more likely to set yourself up for new market success.
There’s room for more than one: Remember there is room for more than one company in most industries. Once one-to-two companies have proven the business is sustainable, it could be a good time to get involved.

Think outside the box
List any areas outside your current market segment or product line not included in the above categories that you wish to explore. Be innovative and entrepreneurial in your thinking. Take your time and brainstorm dig for opportunities with the other members of your team. If there are no constructive ideas, then put together another team representing different functional areas of business.

(Lionel Wijesiri, a corporate director with over 25 years’ senior managerial experience, can be contacted at [email protected])

Columns

Big Ideas for Small Business Managers : Explore virgin territories to discover opportunities hidden

Most Popular Articles

Third review approved by IMF, SL to get next US$ 333 million tranche

Niloufer Esufally-Anverally Makes a Stylish Comeback with the Launch of NLFR

Industries Ministry public day re-launched after four years

Sri Lanka Economic Summit in January 2025

Global Entrepreneurship Week 2024 kicks off across all 25 districts

CBSL’s single policy interest rate mechanism comes into effect today

LATES'T NEWS

Six aircraft diverted due to adverse weather at BIA

Five children missing after tractor swept away in floodwaters

Minor floods...

All spills gates of major reservoirs opened

One dead, over 70,000 affected due to heavy rains