Market opportunity

Market opportunity is a company's recognition of the new needs of potential customers, their requirements and the growing trend in demand for a given product or service and the use of this information to provide consumers with that product or service. A market opportunity involves the failure of competitors to use the factors we have identified. It requires an analysis that will allow us to get to know the market and the customers we want to attract and interest. Appropriate use of market opportunities is possible by adopting an appropriate market strategy, other than that of competitors (K. Banga, V. Mahajan, 2005, p.1). Its proper use is a great opportunity for the company to gain customers, popularity and satisfactory profits.

In the case of start-ups, the choice between the identified market opportunities is considered the most fundamental decision. The choice of alternative market opportunities is also considered to be a good solution in this situation (M. Gruber, I. C. MacMillan, J. D. Thompson, 2008, p.1423-1424)

Analysis of market opportunities

By analyzing the market opportunities, we can approach the feasibility analysis in the right way. Feasibility assay is practically oriented towards what we achieve by focusing on the tools and techniques we use to prepare it, and philosophically healthfull by being strategically stewardship oriented (R. E. Stevens, P. K. Sherwood, J. K. Dunn, 2006, p. XI). Analysis of market opportunities is a part of the strategic planning process and is very important for enterprises nowadays due to the fast and dynamic development of business and, consequently, due to the increasing competitiveness on the market.

Opportunity analysis is about determining the nature of the opportunities that the operational environment gives us. We focus on internal, financial and external conditions (R. E. Stevens, P. K Sherwood, J. K. Dunn, 2006, p. 3-8).

• External analysis - in this analysis the environment is explored. It examines factors such as the legal, technological, economic and cultural environment, for example. The size of the market or consumer behavior must also be taken into account. Another important factor taken into account in this analysis is the study of current and future competitors that may be competing for the same customer groups. The analysis of these external factors requires accuracies and effort.
• Financial analysis - is the next step in the analysis if the external analysis verifies that the factors are favorable to the company. At this stage, the potential profitability of the company is determined. It also results in the determination of the expected rate of return on investment. Determining these results will help to attract and encourage investors. Costs, revenues, profits, and investments shall be analyzed.
• Internal analysis-is the final stage of the analysis. Emphasis is placed on the analysis of objectives, resources, and capabilities that are directly related to a given opportunity, as it happens that even the most workable opportunity does not fit the resources of a given organization.

Examples of Market opportunity

• The rise of e-commerce and the subsequent shift in consumer preferences towards online shopping has created a large opportunity for businesses to market their products and services online. Companies that have embraced this trend have seen tremendous growth in their customer base and profits.
• Another market opportunity is the trend towards the use of mobile technology. As more and more people are using smartphones and tablets, companies are finding ways to make their services and products more accessible to these users. Mobile apps, mobile websites, and even mobile payment systems are some of the ways companies can take advantage of this trend.
• The use of social media has also opened up new avenues for companies to reach potential customers. Companies can use social media platforms such as Facebook, Twitter, and Instagram to promote their products and services and to engage with their customers.
• The increasing demand for organic and natural foods has also created a market opportunity for companies that produce these products. Consumers are becoming more aware of the benefits of organic and natural foods, and companies that can capitalize on this trend can gain a competitive edge in the market.

Advantages of Market opportunity

• Increased Profits: By taking advantage of market opportunities, a business can increase its profits. This is because the company will be able to serve more customers, reach a larger market, and differentiate itself from competitors by offering something that no other company does.
• Expansion of Market Share: When a company takes advantage of market opportunities, it is able to expand its market share. This can be done by targeting customers who are not currently serviced by competitors, by offering unique products and services, or by entering new markets.
• Improved Brand Recognition: Taking advantage of market opportunities can also help a company to enhance its brand recognition. This is because the company will be able to create a unique image in the minds of customers and to differentiate itself from other companies.
• Increased Efficiency: When a company takes advantage of market opportunities, it is able to increase its efficiency. This is because the company will be able to take advantage of new technologies, processes, and strategies to improve the efficiency of its operations.
• Improved Customer Service: Taking advantage of market opportunities can also help a company to improve its customer service. This is because the company will be able to better understand the needs of its customers and to provide them with the best possible service.

Limitations of Market opportunity

One of the main limitations of market opportunity is that it can be hard to accurately assess a market opportunity due to the ever-changing nature of customer preferences, trends and competition. Below are some of the other limitations of market opportunity:

• Market opportunity can be hard to capture and convert into a profitable business due to the high level of competition.
• Market opportunity can be difficult to identify, as it requires data analysis and an understanding of the current market trends and customer preferences.
• Even when a market opportunity is identified, it can be difficult to capitalize on it due to the high cost associated with taking advantage of the opportunity.
• It can be difficult to assess the size of a potential market opportunity, as this requires a thorough understanding of the competitive landscape and the customer base.
• Market opportunity can also be hard to predict, as customer preferences and trends are constantly changing.

Other approaches related to Market opportunity

• Segmentation: Segmentation is the process of dividing a large market into smaller groups of customers with similar needs, characteristics, or behaviors. This divides the market into more specific groups, which helps companies target their products and services more effectively.
• Targeting: Targeting is the process of focusing on one of the identified segments with the aim of building a customer base. Companies identify which segment they want to focus on and develop strategies to serve them.
• Positioning: Positioning is the process of developing a unique and desirable image in the minds of customers. Companies use this to differentiate their products or services from those of the competition.
• Differentiation: Differentiation is the process of developing features that make the company's product or service stand out from the competition. Companies use this to create a unique offering that customers will pay for.

In conclusion, market opportunity involves the identification of customer needs and trends, as well as the analysis of competition, to create a unique offering that will attract customers. Companies should use segmentation, targeting, positioning, and differentiation to identify and capitalize on market opportunities.

Market opportunity — recommended articles

Strategic position — Promotional plan — Competitive environment — Internal analysis — Competitive position — ASTRA analysis — Ansoff strategy model — Competitive positioning — Functions of portfolio

References

• Babazadeh R., Razmi J., Ghodsi R., (2012), Supply chain network design problem for a new market opportunity in an agile manufacturing system, "Journal of Industrial Engineering International", vol.8, p.1-8
• Banga K., Mahajan V.,(2005), The 86 Percent Solution: How to Succeed in the Biggest Market Opportunity of the Next 50 Years, Pearson Education, New Jersey
• Gruber M., MacMillan I. C., Thompson J. D., (2008), Look Before You Leap: Market Opportunity Identification in Emerging Technology Firms, "Management Science", vol. 54, No. 9, p. 1652-1665
• Gruber M., MacMillan I. C., Thompson J. D., (2012), From Minds to Markets: How Human Capital Endowments Shape Market Opportunity Identification of Technology Start-Ups, "Journal of Management", vol. 38, No. 5, p. 1421-1449
• Stevens R. E., Sherwood P. K., Dunn J. K., (2006), Market Opportunity Analysis: Text and Cases, Psychology Press, London

Author: Gabriela Jopek