Identifying market opportunities the traditional way
When it comes to commerce, venturing blindly into the unknown is a recipe for failure. Belief in a market opportunity is not enough – there needs to be hard data. Market opportunity identification is the process of acquiring and analyzing data, from any source, to understand the potential size of a market and the potential share of that market that you can capture.
Broadly speaking, the market should be considered in three segments:
- External: External markets are those that are already established and they may be served by other companies.
- Internal: Internal markets are those that exist within the company but they may not be recognized as such yet.
- Potential: Potential markets are those that have not been identified yet.
Traditional market opportunity identification can be done in a number of ways:
- Firstly, it can be done by surveying the consumers. Market surveys are one of the most effective ways to find out what customers want and how much they are willing to spend for it. This not only gives a company an idea of what to produce but also helps figure out how much money they will make from their products.
- Secondly, market opportunity identification can be done through brainstorming techniques such as the 5 Whys technique. The 5 Whys technique is simple and can be used as a brainstorming exercise by asking why? five times in response to a topic, problem, or issue.
- Thirdly, market opportunity identification can be done by analyzing internal data such as surveys and interviews that have already been done before. Often, large companies will have a lot of unorganized, unstructured information that is divided across departments and projects, from Google Surveys to JotForm to SurveyMonkey. When this data is analyzed, they may find opportunities they weren't aware of before.
- Finally, traditional market opportunity identification can be done by examining external data and data from social media platforms or competitors in the same industry. This includes sites such as LinkedIn or Facebook where both companies' and individuals' data can prove valuable.
One tool that is becoming very popular for market research is Google Trends, which allows people to examine the search volume in a particular area of interest over a certain period of time. For example, if you were interested in finding out about the popularity of rooftop gardens in Los Angeles, you could type into Google Trends Los Angeles Rooftop Gardens, and analyze search trends over time. Additionally, Google Trends lets you easily export this data for further analysis, whether it's to create visualizations or merge with additional data.
Once potential market opportunities have been identified, then the company should consider the decision to either pursue or ignore them. If the company chooses to pursue an external, internal, or potential market, then it needs to consider which approach is best.
For example, if an internal market is being considered for pursuit, it may be best for the company to create an incentive and offer it to its employees in order to get them involved with the new product.
If an external market is being considered for pursuit, it may be best to invest in advertising campaigns to make customers aware of the new product.
If a potential market is being considered for pursuit, it may be best for the company to invest in research and development in order to create a product that will appeal to this new market segment.
There is also a difference between customer-driven identification and opportunity-driven identification. Customer-driven identification is where an organization determines a marketing need based on what customers want or need, whereas opportunity-driven identification is where an organization identifies areas of potential value based on strengths and weaknesses.
For example, if an organization is strong in manufacturing but weak in marketing, then opportunities for enhancement may be found in the marketing area that would not have been found had they done customer-driven identification.
While there are a number of benefits to traditional market opportunity identification, these methods fall short in the modern world, which is faced with big data challenges.
