CHAPTER 2

FRAMING THE MARKET OPPORTUNITY

OBJECTIVES
Characteristics of a networked economy
How to analyze the market in the networked economy
Basic value types in the networked economy

WHERE WILL THE BUSINESS COMPETE?

Customer needs not fully met
Few or no competitors
Large financial opportunity
Company is well positioned

MARKET OPPORTUNITY ANALYSIS IN THE

NETWORKED ECONOMY
Requires different approach. Due to:

Competition occurs across industry boundaries

Competitive developments and responses are occurring at an
unprecedented speed
Competition occurs between alliances of companies rather than
between individual companies
Easier to influence ad change CB
Industry value chain, or systems, are rapidly being reconfigured

COMPETITION ACROSS INDUSTRY

BOUNDARIES
Lack the constraints of physical product manufacturing or
service delivery

Accurately match value creation from customers perspective

Firm should not narrowly defined opportunity assessment

COMPETITIVE DEVELOPMENTS AND

RESPONSES
Advances in technology
Adoption of creative business models
Product development cycles
Must continually refreshed market-opportunity assessments

COMPETITION BETWEEN ALLIANCES

Complementary products

E.g.: web business browser OS PC telco

Assessment internal & external possibilities

Alliances with other organizations

INFLUENCE AND CHANGE CB

Introduce products leading to new behavior and requirements

Not simply meet defined need

Define new experiences based on insights into how

customers are acting

INDUSTRY VALUE CHAINS & SYSTEM

Internet = 24/7 interactions increased level of information
throughout the value chain

Eradicating/significantly reduced cost of stages in the value

chain

MARKET OPPORTUNITY ANALYTIC

FRAMEWORK
To analysis market opportunity
Consist of five investigative stages

Not necessarily sequential

Could start from any point

MARKET OPPORTUNITY ANALYTIC

FRAMEWORK
Step 1: Investigate opportunity in an existing or new value system
Identifies previously unexploited areas of potential market value for further analysis
Step 2: Identify unmet or underserved needs
Uncovers customer decision process and opportunity nucleus that a new offering could address
Step 3: Determine target customer segments
Allows a company to craft an offering that will appeal to the target customers
Step 4: Assess resource requirements to deliver the offering
Identifies existing resource strengths and weaknesses needing to be addressed internally or with partners to bring offering to market
Step 5: Assess competitive, technological, and financial attractiveness of opportunity
Determines the character and magnitude of the opportunity; establishes barriers to entry and potential rewards
Step 6: Conduct go/no-go assessment
Determines whether the opportunity is attractive enough to pursue

THREE BASIC VALUE TYPES

Trapped value
More
efficient
markets
More
efficient
value
system

Hybrid value

New-to-the-world value

Disrupt
pricing
Ease
access
Radically
extend
reach

Customize
offerings
Build
community
Introduce new
functionality
or experience

TRAPPED VALUE
More efficient markets

Lower search & transaction costs

More efficient value system

Compressing/eliminating steps in current value system

Decreasing overhead costs

NEW-TO-THE-WORLD VALUE
Customize offerings

Flexibility & economic advantage = customize products or services

Remove features customer do not value

Build community

Chat rooms, public & private communities

New functionality/experience

Convergence of communications, computing, and entertainment

Form & functionality of access devices

HYBRID VALUE
Disrupt pricing
Customer gain influence over pricing knowledge of the vendors current supply

demand situation
Customer gain greater negotiating power

Ease of access
Access point & degree of communication between relevant exchange partners

Radically extend reach

Extend the boundaries of existing market
Create new market
Enable collaboration between multiple people across locations and time

THE END
U TANYA I JAWAB