Market Opportunity Evaluation

Posted in Marketing and Strategy Terms, Total Reads: 2567

Definition: Market Opportunity Evaluation

When companies try to develop new products and services or try to enter into a new market segment, they use research for:

• Identifying new market opportunities

• Estimating the size of the market

• Identifying barriers to entry

• Identifying market requirements

• Matching of opportunities to those of the firm’s resources, policies and strategies


All this research is referred to as Market Opportunity Evaluation. This evaluation of market opportunities involves most of the following dimensions:

• Purchase history

• Purchase cycles

• Existing unmet market needs

• Relative addressing priority of the existing needs

• Substitutes used at present in the market

• Strengths and weakness of the competitors

• Market willingness to invest

• Availability and sources for financing the budget

• Readiness of the market to adopt a new product or service


The nature of the offerings, the type of market being evaluated and the evaluation process stage play an important role in deciding the approach for the evaluation of market opportunities. The approach can be qualitative and quantitative.

The qualitative techniques include focus groups and in-depth interviews. The quantitative techniques are used in the later stages of the evaluation process when there is need of numbers to analyze the market size.

A framework used to evaluate market opportunities is called POEM- product opportunity evaluation matrix. This framework accounts for fundamental market dynamics helping managers to evaluate the success of an idea. According to this framework, there are 5 forces that drive the market opportunities:

• Timing

• Customer

• Product

• Finance

• Competition


Generally 5 accepted truths are stated for each of the above forces and the marketer needs to grade these truths on scale of A-F. An average score for each of the 5 forces is calculated. This gives an account of the significant market dynamics that may affect the success of the idea.


An example of The Product Opportunity Evalaution Matrix (POEM) framework:


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


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