Market Opportunity Analysis - Meaning, Importance, Steps & Example

Published in Marketing and Strategy Terms by MBA Skool Team

What is Market Opportunity Analysis?

Market Opportunity Analysis is a tool to identify and access the attractiveness of a business opportunity to be viable and feasible. 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.

Importance of Market Opportunity Analysis

Before launching a business or a product, proper analysis is very important. Launching a business without knowing the market, the target group, competition, sales/revenue opportunity will cause issues and losses. Proper analysis will give the right marketing intelligence required to successfully launch a business and position the products and services to the right target group.

Every market will have an opportunity which can be fulfilled and target group would be interested in buying products and services if they are better than the current offerings. If a company enters a market without understanding the current landscape, market forces and current offerings in the market, then they may see a situation in which they run a risk of bringing a product which is exactly

5 Steps in the Market Opportunity Analysis

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 currently and in 3-5 years and Types of marketing practices.

It also analyzes the 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.

Market Opportunity Analysis Example

Let us say, we are launching a new fast food store in New York. Before launching the business, the company would have done work on menu and items along with combos and beverage options. But using market opportunity analysis, they can see how much fast food stalls are there in the city and what areas have more of them. Also they can see if the business model will work in the coming years and would it grow?

After this, the important step would be analyzing the competitors. If there are too many competitors or there are none. Both the situations require proper analysis else there is a risk of business failure. The target group has to be understood with their preferences, demographics etc. followed by an achievable sales targets.

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

This article has been researched & authored by the Business Concepts Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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