Framework for Market Opportunity

1. Framework for Market Opportunity Seed Opportunity in Existing New Value System Identify Unmet and Underserved Need(s) Identify Target Segment(s) Declare Company’s Resource-Based Opportunity for Advantage Assess Competitive, Technological, and Financial Opportunity Attractiveness Make “Go / No-Go” Assessment

2. Framing the Market Opportunity • MSN CarPoint identified an opportunity to leverage the Internet to deliver customer value in the car industry Leverage the Internet to Improve the Consumer Car-Buying Process • The retail car-buying process was frustrating and inefficient: • Little information available to the consumer • Bargaining with salesperson viewed as an hassle • Long process overall Car Buyers Are Dissatisfied With Current Retail Car-Buying Process • MSN CarPoint selected two primary target segments for its service: • “The intimidated by the process” • “The information seekers” Shoppers Who Feel Intimidated by Sales People and Look for More Efficient Way • MSN CarPoint could leverage Microsoft’s expertise in software development, its brand name and its multitude of online properties Microsoft’s Software and Free Placement on All Its Websites • Competition was getting fierce with more and more online car services entering the market… • But the financial opportunity was large: 66% of new car buyers were estimated to use online services in 2000 How Big Is the Online Car-Buying Market? Who Are CarPoint’s Main Competitors? • In 1996, the first version of CarPoint was shipped • By 1998, CarPoint was driving $5 million in car sales a day Make “Go / No-Go” Assessment

3. Competition Occurs Across Industry Boundaries Rather Than Within Industry Boundaries • Web-enabled business models often lack theconstraints of physical product manufacturing and service delivery • Can match value creation from the customer’s perspective • Ex. CarPoint: customer can • Research • Purchase • Finance • Obtain insurance • all at one place • Lesson: Do not limit opportunity assessment to narrow or traditional definitions of industry or value systems

4. Competitive Developments and Responses are Occuring at an Unprecedented Speed • Advances in technology and the adoption of Creative Business Models are occuring rapidly! • Ex. Browser Wars • Microsoft vs. Netscape in late ‘90s • Q: How often do you think new versions appeared? • A: Approximately every six months. • Lesson: Keep abreast of important trends that could redefine opportunity attractiveness.

5. Consumer Behaviour is Easier to Influence and Change • Companies can introduce products that lead to new behaviour and customer requirements • What companies have greatly influenced the music industry and how?;What technology have these companies taken advantage of?;What other industries have also been affected by this trend and how?

6. Competition occurs between alliances of companies rather than between Individual Companies • Ex. Browsers depend on operating systems, PCs and modem technologies • Co-opetition • Companies as both competitors and collaborators

7. Industry Value Chains, or Systems are Rapidly being Reconfigured • What are some ways in which the Internet has allowed businesses to reconfigure customer interaction? • 24/7 interactions • Increasing the level of information throughout the value chain • Eradicates or reduces the cost of some value chain stages • Ex. Job Placement / Executive Recruiting industry • Now a two-way exchange (employers search resumes; job seekers search postings) • Greatly enhances the access and reach of individuals in this marketplace

8. Value Systems • An interconnection of processes and activities within and among firms that creates benefits for intermediaries and end consumers • entire chain of suppliers, distributors, competitors, buyers and intermediaries • Often a value system can be reinvented in the networked economy

9. Three Value Types for new business possibilities 1. Trapped Value • Unlock trapped value by creating: • A. more efficient markets by lowering search and transaction costs • (How does Lending Tree (www.lendingtree.com) do this?) • B. more efficient value systems by compressing or eliminating steps in a current value system • ex. distribute in-house, technical documents over the web

10. Three Value Types for new business possibilities 2. New-to-the-World Value • Enhance an existing offer or become the basis for a new offer by: • A. Customizing Offerings • Weather.com • How does Quicken.com do this? • B. Building Communities • What are some community building tools • look at myfamily.com for examples • Q: What marketing lever is best exploited through community building? • A: Viral Marketing • C. True New-to-the-World Functionality or Customer Experience • Most famous example is Napster with file-sharing (peer-to-peer) and the MP3 file format • How does net2phone.com create true new-to-the-world functionality

11. Three Value Types for new business possibilities 3. Hybrid Value • synergy between both Trapped and New-To-The-World Value by: • A. Disrupting Current Pricing by creating transparency in the retail industry and offering unbiased information • What are two ways in which mysimon.com does this? • B. Enabling Ease of Access by creating portal sites (ex abebooks.com) or internet channels for existing stores (ex. Target.com) • C. Radically Extending Reach by extending the boundaries of an existing market or creating a new market by delivering more cost-effective reach • any distance learning site

12. Exhibit 2–2: Three Types of Basic Value • Trapped Value • New-to-the-World Value • Disrupt pricing • Ease access • Radically extend reach • Customize offerings • Build community • Introduce new functionality or experience • More efficient markets • More efficient value systems • Hybrid Value