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Market Opportunity & Analysis Part 2. CPS 181s Jan 21, 2003. Future Case Studies. 500 words initial post and each response Raise questions, point out contradictions What was fascinating, what did you struggle to understand? Extrapolate future areas of inquiry
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Market Opportunity & AnalysisPart 2 CPS 181s Jan 21, 2003
Future Case Studies • 500 words initial post and each response • Raise questions, point out contradictions • What was fascinating, what did you struggle to understand? • Extrapolate future areas of inquiry • Focus on ideas, depth and critical analysis • Use other resources for research
Grading • Each Case Study (9) - 40 points • Case Discussion Leader - 50 points • In-Class Assignments - 80 points • Class Participation - 50 points • Midterm Project Progress Report - 100 points • Final Project Presentation - 400 points Total = 1040 points
Tools & Techniques to Determine Where Will Business Compete? • Customer needs? • Financial opportunity? • Competitors? • Company resources or partners to fulfill needs?
Framework for Diagnosing Market Opportunity What is the Playing Field for the Business? Identify Unmet and Underserved Needs 5 Conditions To Satisfy Identify Target Customer Segments Company’s Capabilities that Bring Opportunity or Advantage Assess Competitive, Technical and Financial Opportunity Attractiveness Make Go / No Go Assessment
Does Segmentation Matter? • Can you give an example of a company that segments the market? • Do you feel segmentation increases profits? • Does it make any difference in the on-line world? • Does it provide any value to the customer? • Does segmentation facilitate customization or personalization?
Real goal is to reach critical mass with key customer segment in as short a time as practical No-analysis blind alleys, partner negotiations, and customer complaints bog a company down if they don’t sort out a clear opportunity path from the start Second and third movers capitalize on the mistakes of other to get more customers for less cost No-analysis may feel like moving fast without assessment, but actually generating more heat than light Speed not precision (=lost time) Network economics capitalize on first-mover momentum Rapidly connect and lock in large numbers of customers Large customer base provides lower costs Old rules no longer apply, a company is better off learning by doing Which is Better? Analysis vs No Analysis
Create more efficient markets Create more efficient delivery (value) system Enable ease of access Disrupt current pricing power (consumer power) Customize offerings Radically extend reach and access Build community Enable collaboration-across people, location, time New functionality or experience Trapped Value vs New Value
Tools • Segment Prioritization Chart?
Segment Prioritization Chart Occasion Trip Purpose Personal Business Flexibility Who Last Minute All Other Trips Business Trips Students on Vacation Students Going Home Students Retirees Retirees Low – Middle Income / Not Frequent Fliers Low / Mid Income on Getaways Low / Mid Income Families on Vacation Other Low / Mid Income on Vacation Demographics and Behavior Middle – Upper Income / Frequent Fliers High Income Families on Vacation Total Number of Trips = 45%–55% of the Market High Income Non-Family Trips Group Trips Groups = Approximately 45%–55% of the Total Market = Primary Focus
Tools • Segment Prioritization Chart • Analyze which customer segments to pursue
Tools • Segment Prioritization Chart • Competitor Maps (egg diagram)
Competitor Profiling — Eastman Kodak • HP • Olympus • cameraworks.com • Snapfish Eastman Kodak • Fuji PurchaseCamera Purchase Accessories Purchase Film • Moto Photo Take Pictures Store Pictureson CD Direct Competition IndirectCompetition Digitally ManipulatePictures SharePictures • Seattle Filmworks • AdobeSystems Download and Choose Pictures to Print Print and Receive Pictures • Geocities • Shutterfly • District • Ofoto • Snapfish • HP
Tools • Segment Prioritization Chart • Competitor Maps (egg diagram) • Underserved areas • competitor strengths • potential collaborators
Tools • Segment Prioritization Chart • Competitor Maps (egg diagram) • Competitor Mapping to Selected Customer Segments
High performance level Medium performance level Low performance level Competitor Mapping to Selected Segments for Priceline
Tools • Segment Prioritization Chart • Competitor Maps (egg diagram) • Competitor Mapping to Selected Customer Segments • Unconstrained opportunities • segment interactions • growth potential
Tools • Segment Prioritization Chart • Competitor Maps (egg diagram) • Competitor Mapping to Selected Customer Segments • Opportunity Assessment Chart
Tools • Segment Prioritization Chart • Competitor Maps (egg diagram) • Competitor Mapping to Selected Customer Segments • Opportunity Assessment Chart • Overall effect considering all factors • Managers assess magnitude of company’s impact
Go/No-Go Assessment (Opportunity Story) =Rough Draft of Business Plan • Describe target segment within selected value system • Articulate high-level value system • Spell out customer benefits • Identify critical capabilities and resources needed to deliver customer benefit • Categorize critical capabilities as in-house, build, buy, or collaborate • Describe how company will monetize the opportunity (i.e., how it will capture some portion of the value that it creates for its customers) • Provide an initial sense of the magnitude of the financial opportunity
Schwab: Unmet and Underserved Needs (1997 Timeframe) Process Steps Unmet and Underserved Needs Plan Savings Goal • Planning tools to simplify goal setting Determine Optimal Asset Allocation • Education on investing Receive Ideas and Recommendations Research Stocks • Aggregation of investment information Place Order • Place order and track status anytime, anywhere Track Portfolio Performance • Access real time account information Receive Dividends Sell Stock • Place order and track status anytime, anywhere Tax Reporting • Download to tax software
Schwab — Opportunity Attractiveness vs. Resource Availability Quality Information High Customer Service Quality Advice Opportunity Attractiveness Low Low Price Full Management Low High Resource Availability Note: Opportunity attractiveness based on competition level and opportunity financials
Capability highly addressing segment need Capability moderately addressing segment need Capability not addressing segment need Schwab Resource Availability Segments Company Capabilities Partner Capabilities Overall
= Low = High Effectiveness of Different Segmentation Methods Segmentation Methods Segmentation Criteria
“Saving For a Goal” “Financial Planning” “Traders” • Saving for retirement • Saving for college • Saving for house down payment • Estate planners • Tax planners • Trust fund managers • Hobby investors • Active traders Needs Based Segmentation: Charles Schwab Schwab’s market segments fall into three categories Source: Jeffrey Veen, Hot Wired Style, Monitor Analysis
Secondary Priority High Priority Tertiary Priority De-emphasize Schwab Segmentation (1997 Timeframe) Other White Collar Blue Collar Retiree University Student High Net Worth (<$1M) Buy and Hold Frequent Trades Current Offline Schwab Customer < 30 Single > 30 No Children Not Schwab Customer Married Children Mature( > 55)
High performance level Low performance level Schwab — Competitor Map to Segments Medium performance level
Case Study – Virtual Vineyards • What are the market conditions that allow VV to provide value to suppliers? To end-users. What end-users does VV target? • What is the business model of VV? • How has VV established its acknowledged dominance of virtual retailers in this category? What are the resources that VV has used to develop this dominance? • What are the attributes of a high quality retail service when it is delivered screen-to-screen rather than face-to-face? • What additional actions might VV take to enhance their position in the marketplace? • What are the major problems confronting online firms when they attempt to craft a unique, sustainable business model?
