Market Opportunity Evaluation

Published by MBA Skool Team, Last Updated: January 22, 2018

What is 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:

 


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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