Opportunity Analysis: Definition and How to Conduct Market Opportunity Analysis
Continually generating new ideas is part of staying relevant. Exploring all the possibilities is difficult because there are only 24 hours a day. Although an idea may sound good in theory, it could be useless. How do you decide which photos to look at and which ones to skip? Market opportunity analysis is where you come in. You can narrow your options so you don’t suddenly approach things.
What’s Market Opportunity Analysis?
Market opportunity analysis (also known as opportunity assessment) is a process that helps you find more clients and increase your revenue share. This involves identifying competitors and understanding your audience, and it also identifies potential risks. You can use a market opportunity analysis to determine which business ideas are most profitable and least risky.
The market opportunity analysis can benefit any organization, no matter how small. All organizations, regardless of size, can benefit from a better understanding of the industry in which they operate or are looking to enter. It doesn’t matter if you are a nonprofit, a business owner, or a B2C or B2B business; understanding your market will help you make better business decisions.
This analysis can help expand your business with new product development, new markets, or unique aspects of your current needs.
Market Opportunity Analysis
There are many reasons to take the time to look at your options before deciding. A market analysis will provide five benefits.
Better Long-Term Strategic Business Choices
External factors can have a significant impact on your business. If you don’t take the time to analyze the market trends, your business will be in peril.
A market opportunity analysis can give you insight into the future, giving you an idea of the future market share in one year, five years, and ten years. It is possible to determine the forces driving the market and how your target audience is changing.
Evaluate Product or Service Demand
Although you may have a great product idea, it is difficult to make it a reality if the market is small and complex. The market assessment will give you an idea of the ease with which you can sell your product/service and help you decide if expanding into new markets is a good idea.
It doesn’t necessarily mean that there is no market for your idea, which means you will be working with a Blue Ocean Strategy. This approach recognizes that many industries do not exist today, implying that the market space is unexplored and unaffected by competition. Blue oceans are where you create demand rather than fighting for it, and there are many opportunities for rapid, profitable business growth.
In this scenario, you may fail to create a market and need to educate customers about the new idea even if you have created market demand. This is why strategic planning is essential.
Find Potential Marketing Strategies
These are the four Ps:
A market opportunity analysis helps you learn more about your customers and what they are looking for.
After reviewing current market data, you can price your product to make it attractive enough for customers to buy and turn a profit. You will know which promotional strategies work and what partnerships to pursue. Are direct sales the solution? Is inbound marketing more effective?
More Market Research
You may be able to discover new markets that are worth exploring and investing in once you have a better grasp of your market. You don’t always know what you don’t know.
You might not have known about a problem you were facing through customer research. You will be better able to capitalize on new opportunities in changing business environments if you have a deeper understanding of your market.
Plan and Find Potential Roadblocks
A SWOT analysis is an integral part of market opportunity analysis. SWOT analyzes a strategy’s strengths and weaknesses, potential opportunities, and threats. There is no perfect business idea, and knowing where you may run into problems before you start is key to success. This will allow you to get ahead of them and then take steps to reduce or mitigate the effects of those risks.
Every business opportunity is not worth the effort, and it doesn’t matter your business model or market share size. By conducting a market opportunity analysis, you can be sure that your focus is on the right things.
How to Conduct Your Own Market Opportunity Analysis
Step One: Identify Potential Opportunities
First, determine the opportunities that you are interested in. Which market segment are you looking to grow? Which type of customer do you want to attract? Do you want to partner with or acquire another business? Do current events offer a chance to make a profit?
Understanding whether you are looking to expand, create or invest in your offering will help guide your market research.
Once you have identified your market opportunities, it is time to begin researching their potential.
Step Two: Understand Your Target Customers
Customers are the best source of information for your success. Is the product able to meet their needs? Can the customer purchase enough products to make your idea a success? What are their buying decisions?
You will now need to understand your customers and their needs fully. This is the second part of your analysis. This is the second step of your market opportunity analysis. Asus now has a range of tools to help you with this task, including:
- Customer interviews
- Demographic Information
- Customer journey maps
- Market entry strategy
- Current market trends
- Existing market strategy
- Company focuses
- Competitive landscape
Step 3: Research the Competition
This stage is crucial because you will need to know the names of all current market players. Competitor research can help you understand the size of the markets and the position of existing products in them. Market research will also show you how crowded the market is. You can also see who the leading players are to help you develop a strategy to win once you have entered the market.
Ask questions like:
- What’s the value proposition?
- What is the difference between their product offering and ours?
- Who is their partner?
- What are customers saying about their products and services?
- What’s the conversation like on social media?
- Could we fill the gaps?
- Is it likely that there will be new competitors entering the market?
- Do you have a unique competitive advantage?
- What new business ideas can you implement?
Step Four: Consider External Factors
Many external factors influence and alter the market. The acronym STEEP can remind you of the five major forces that must be considered when you plan.
Social factors look at how culture is changing the market. The pandemic has led to more people working remotely, opening up a new market segment. If trends are not quickly disappearing, jumping on them may prove to be a profitable strategy.
The technical factors are what Innovations have had an impact on the market. What new technologies, advancements, or ways can you use technology?
Economic factors assess the current economic climate. Is it possible to obtain a loan if needed? Are your customers able to afford a loan? What is the market potential for the next twelve months? What about the next five years? As we saw with the pandemic, economic factors can harm the supply chain. What will happen to your business growth if your supply chains fail?
How does your business idea impact the environment? You can also improve the sustainability of your product and service in other ways. Is your concept sustainable enough to be eligible for government grants?
Your business ideas could be affected by the political climate. You may be surprised that your state or local government offers tax breaks, grants, or other incentives for companies in your industry. You may also need to consider their regulatory issues in your analysis.
These questions will give you an edge in dealing with market fluctuations.
Step Five: Consider Internal Factors
You must examine the capabilities of your business to complete your market opportunity analysis. Can you use the financial resources, workforce, and technology to invest in new products or services? Can you find the right people to help you launch something innovative? What new departments or teams will you need to establish to manage this opportunity? How much will it cost to make this idea a reality?
Make Better Decisions
Some ideas are not worth pursuing to the end, and many are worth pursuing. Market opportunity analysis will allow you to identify the best business strategies to help you grow. Do your research before you purchase your following product or service. You might end up with investments that pay off over the long term. After completing a market analysis demonstrating an idea worth following, it is time to create a business plan.
A market opportunity is a chance to enter a new market or to expand into a new product area. This could be done by identifying a new customer need or taking advantage of a technology change for a competitive advantage. For example, a company might identify new potential customers’ needs for a particular product and then develop a new product to meet that need. Alternatively, a company might take advantage of a technology change to create a new product that is more efficient or less expensive than its existing products.
Market opportunity analysis is essential because it helps organizations understand how to enter new markets best. By understanding the potential opportunity within a market, organizations can make informed decisions about where to allocate resources to maximize their chances of success. Additionally, market opportunity analysis can help organizations identify potential threats and develop strategies to mitigate them.
The marketing opportunities analysis methods are tools to evaluate potential markets and determine the best course of action for a company to increase its potential customers. These methods help companies identify opportunities and assess their potential for success.
There are several different marketing opportunities analysis methods, each with its strengths and weaknesses. The most common way is the SWOT analysis, which looks at a company’s strengths, weaknesses, opportunities, and threats.
There are four critical components to market opportunity analysis: 1) Segmentation – dividing the market into distinct groups with different needs, 2) Targeting – selecting the most appropriate segments to focus on; 3) Positioning – creating a unique and value-added proposition for each target segment, and 4) Messaging – developing clear and compelling messages that resonate with each target segment.
There are generally five stages to opportunity analysis: (1) problem or need identification, (2) market research, (3) target market selection, (4) product or service development, and (5) implementation and evaluation.
The first stage, problem or need identification, is crucial because it is the foundation for the entire opportunity analysis. This stage involves understanding the market’s problem or need and determining if there is a potential opportunity to address it.
A market opportunity refers to a situation in which there is unfulfilled demand in the market for a particular product or service. For example, if a new technological advancement creates a need for a new type of product, this would be considered a market opportunity. Companies can identify market opportunities by analyzing trends and conducting market research.