3 Questions to Jump Start Market Opportunity Analysis

If you want to launch, grow or diversify a business, then you need to spend some time – a LOT of time – researching and understanding the potential market opportunity. Having tremendous talent or a really great idea just isn’t enough. You need to do some digging to answer the following questions:

How are people meeting this need today? Remember that not all competition is direct. Let me give you an example. I worked with a client who designed a new fastening technology. There was nothing quite like it on the market, so the client believed there to be no competition. In fact, there was a lot. The competitive offerings may not be a direct comparison, but people are fastening things down somehow. Really open your mind and consider how you attach and fasten things. We use bungee cords, rope, zip ties – and the list goes on. So, the question is not whether you have competition – because you do. The question becomes how people are meeting that need today, and whether your offer provides enough value for them to consider changing habits and potentially paying more for the solution.

Is someone else already filling this need? Now that you’ve considered how the need is currently met, think about your competition. Is someone else already doing this? If so, are you able to do it faster, better or cheaper? If not, then you need to consider how you can, so your offer is differentiated. Sometimes this means walking away from an idea as well. If it’s just not feasible and viable for you to make your offer faster, better or cheaper than the competition, the market opening may not be big enough for two (or more!) of you. Keep in mind that customer experience can be a huge differentiator, and your ticket to winning.

Is the opportunity financially viable? There is a lot more than product cost to be considered when determining price and profit (or loss). First, you should price your product or service based on the value it brings to the market and what people are willing to pay for that value. If you try to price based on the cost you have into it, you will likely be priced too high or too low for the market. Too high, and you’ll price yourself out of the market. Too low, and you’ve left money on the table. When considering financial viability, look at your total business costs. In addition to product costs, consider labor, equipment, utilities, buildings, marketing, tax obligations, supplies – everything. Do your homework to understand how much you have to spend to make and market your offer. If you look at just the product or service cost, you will end up with an unpleasant surprise when all of the other expenses add up.

Now that you’ve vetted your opportunity, you can make an educated decision about whether to continue into the strategy phase or go back to the drawing board. Marketing Flexibility is available to assist with your market research and analysis needs. Visit us at www.marketingflexibility.com or email kris@marketingflexibility.com for a free consultation.