Market Opportunity Analysis

Posted in Marketing and Strategy Terms, Total Reads: 19060

Definition: Market Opportunity Analysis

A tool to identify and access the attractiveness of a business opportunity. It is a part of the business planning or strategy processes wherein before undertaking a new product or service, you analyze the market for it to determine probable profit and revenue from it. One of the most important factors considered and analyzed in market opportunity analysis is the forecasted demand for the product or the service.


Some important questions which one tries to answer through a market opportunity analysis are the most profitable market segment, rate at which the opportunity is growing, competitor and gap analysis, what are the key sustainable differentiation points etc. Through these, one tries to answer questions on how to enter the market and what should be the key value proposition.


Five steps that can be followed to analyze market opportunity analysis

1) Identify the business environmental forces – The factors to consider while analyzing the business environmental factors are - Economic conditions and trends, Legal and regulatory situations and trends, Technological positioning and trends (state of the art; related R&D), Relevant social changes and Natural environment.

2) Describe the industry and its outlook – The factors to be considered while performing industry analysis are - Type of industry, Size -now and in 3-5 years, Types of marketing practices, Major trends and Implications for opportunity.

3) Analyze the key competitors – The factors considered here are - Product description, Market positioning (relative strength and weaknesses, as seen by customers), Market practices: channels, pricing, promotion, service, Estimated market share (if relevant) and Reactions to competition

4) Create a target market profile – The factors to be considered are - Levels: generic needs, product type, specific brands, End-user focus; also channel members, Targeted customer profiles, Who are my potential customers , What are they like as consumers/businesspeople, How do they decide to buy / not buy , Importance of different product attributes and What outside influences affect buying decisions.

5) Set Sales Projections – As many formal or intuitive approaches as possible for determining this should be used and then the results obtained should be compared and then a decision should be taken on go or no go for the product/service in question.


Hence, this concludes the definition of Market Opportunity Analysis along with its overview.

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