Market attractiveness

Market attractiveness
See also

Market attractiveness is a measure of the potential of the marketplace to yield growth in sales and profits. It is important to stress that this should be an objective assessment of market attractiveness using data external to the organization. The criteria themselves will, of course, be determined by the organization carrying out the exercise and will be relevant to the objectives the organization is trying to achieve, but it should be independent of the organization's position in its markets[1].

Once agreed, under no circumstances should market attractiveness factors be changed, otherwise the attractiveness of our markets is not being evaluated against common criteria and the matrix becomes meaningless, Scores, however, will be specific to each market.

The matrix shows the current level of attractiveness at the present time. This implies carrying out one set of calculations for the present time according to market attractiveness factors, in order to locate markets on the vertical axis, then carrying out another set of calculations for a future period (say, in three years' time), based on our forecasts according to the same factors. In practice, it is easier to carry out only the latter calculation, in which case the circles can only move horizontally[2].

Classification of market attractiveness

Dominant factors which determine market attractiveness can be generally classified as[3]:

  • stability of technology (whether process technology is well established or not with its impact on product performance);
  • size of the market (larger markets are generally more attractive than smaller markets)
  • market growth rate (growing markets are more attractive than zero growth markets, mature markets or markets in decline)
  • intensity of competition (markets with low competitive intensity are attractive)
  • customer product sensitivity (how quality conscious is the customer)
  • customer price sensitivity (whether price, and not quality, is the most important consideration).

How to innovate when the Market is mature

Five vectors must be in place to undertake type of innovation to yield bolder and more imaginative development projects. First, develop a bold innovation strategy that focuses your business on the right strategic arenas that promise to be engines of real growth. Most businesses focus their efforts in the wrong areas—on flat markets, mature technologies, and tired product categories. Next, foster a climate and culture that promotes bolder innovation. Leadership is vital to success. If senior management does not have the appetite for these big concepts, then all your efforts and systems will fail. Next, create “big ideas” for integrated product-service solutions. Then drive these “big concepts” to market quickly via a systematic and disciplined idea-to-launch system designed for major innovation initiatives. Finally build a solid business case and focus on the winners[4].

Footnotes

  1. M. McDonald 2010, p.219
  2. M. McDonald 2000, p.197
  3. A. Naga 2011, p.135
  4. R.G. Cooper 2011, p.2

References

Author: Sylwia Jurkowska