Assessing Market

Opportunities
 Company Customer
Insights Insights

Market Insight
Competitor Segmentation
Insights Insights

Strategic
Market Opportunity Assessment
& Targeting
Planning Strategy
Objectives & Strategic Focus
Model Development

Positioning

Value Creation, Value Delivery,

Program Design Value Communication, &Value Extraction

Macro-Analysis

Micro-Analysis
Budgeting

Execution 2
Basic Principle

Value of Market = Inherent x Likelihood of

Opportunity Attractiveness Success

3
Methodology

▪ Identify the set of market opportunities

▪ geographical markets, new product markets, market
segments, major customers, …
▪ For each opportunity, assess (a) inherent
attractiveness for the company and (b)
company’s relative competitiveness with respect
to this opportunity
▪ Compare across opportunities in terms of both
(a) and (b)
▪ Target and allocate resources accordingly

4
Attractiveness x Competitiveness Analysis

Attractiveness Competitiveness

5
Attractiveness Assessment

Define Attractiveness
Criteria

Determine Relative
Importance

Rate each Segment

on each Criterion

Compute Overall
Attractiveness Scores

6
Attractiveness Assessment

Define Attractiveness
Criteria

Determine Relative
Importance

Rate each Segment

on each Criterion

Compute Overall
Attractiveness Scores

7
Define Attractiveness Criteria

Assuming that we would be competitive,

what would make a given market
opportunity attractive or unattractive to
us given our company’s culture and
objectives?

8
Common Attractiveness Criteria
▪ Current size
▪ Potential size
▪ Growth rate
▪ Expected life cycle
▪ Customer willingness to
pay
▪ Cost of operation
▪ Profit margins
▪ Lifetime-value of
customers
▪ Low competitive intensity
▪ Potential for differentiation
▪ Consistency with identity
▪ Financial risk (e.g., inflation,
currency)
▪ Synergies (e.g., channel)
▪ Cross-selling potential
▪ Customer loyalty
▪ Willingness to commit to
long-term contracts
▪ Low market volatility
9
Attractiveness Assessment

Define Attractiveness
Criteria

Determine Relative
Importance

Rate each Segment

on each Criterion

Compute Overall
Attractiveness Scores

10
 Attractiveness Criteria & Relative
Importance
What criteria define
attractiveness in What is their relative
your company/ importance?
Attractiveness Criteria Relative
division?
Weights

100

11
Attractiveness of Credit Card
Customers (South American Bank)

Attractiveness Criteria Weight

Low credit risk 15

Annual fee revenue potential 15
Loyalty 7
Segment size 7
Typical card usage and spending 10
Use of revolving credit 25
Cross-selling potential 7
Segment growth rate 6
Low account acquisition and
8
maintenance costs
100

12
Attractiveness Assessment

Define Attractiveness
Criteria

Determine Relative
Importance

Rate each Segment

on each Criterion

Compute Overall
Attractiveness Scores

13
Segment Opportunities Ratings
Rate each segment, criterion by criterion, on a 0 (very poor)
to 10 (excellent) scale

Criteria Segment 1 Segment 2 Segment 3 Segment 4

14
Attractiveness of Credit Card
Customers (South American Bank)

Middle
Attractiveness Criteria Sub-prime
Class
Travel Premium

Low credit risk 3 5 6 8

Annual fee revenue potential 2 4 6 10
Loyalty 7 6 5 4
Segment size 8 7 3 1
Typical card usage and spending 2 4 5 7
Use of revolving credit 7 6 5 4
Cross-selling potential 7 7 6 5

Segment growth potential 8 6 3 1

Low account acquisition and

8 6 5 3
maintenance costs

15
Attractiveness Assessment

Define Attractiveness
Criteria

Determine Relative
Importance

Rate each Segment

on each Criterion

Compute Overall
Attractiveness Scores

16
Attractiveness of Credit Card Customer
Segments (South American Bank)
Sub- Middle
Attractiveness Criteria Weight prime Class Travel Premium
Low credit risk 15 3 5 6 8

Annual fee revenue potential 15 2 4 6 10

Loyalty 7 7 6 5 4
Segment size 7 8 7 3 1

Typical card usage and spending 10 2 4 5 7

Use of revolving credit 25 7 6 5 4
Cross-selling potential 7 7 7 6 5

Segment growth potential 6 8 6 3 1

Low account acquisition and
maintenance costs 8 8 6 5 3
Attractiveness scores: 536 549 511 540

17
Competitiveness Assessment

▪ Do not pursue a market opportunity only

because it seems attractive
▪ Take also into account your likelihood of
being successful in competing for this
market opportunity

18
Competitiveness Assessment

Identify Success Factors

Segment by Segment

Determine Relative
Importance

Comparatively Rate
Yourself on each Factor

Compute Competitiveness
Estimates

19
Attractiveness of Credit Card Customer
Segments (South American Bank)
Sub- Middle
Attractiveness Criteria Weight prime Class Travel Premium
Low credit risk 15 3 5 6 8

Annual fee revenue potential 15 2 4 6 10

Loyalty 7 7 6 5 4
Segment size 7 8 7 3 1

Typical card usage and spending 10 2 4 5 7

Use of revolving credit 25 7 6 5 4
Cross-selling potential 7 7 7 6 5

Segment growth potential 6 8 6 3 1

Low account acquisition and
maintenance costs 8 8 6 5 3
Attractiveness scores: 536 549 511 540

20
Competitiveness Assessment

Identify Success Factors

Segment by Segment

Determine Relative
Importance

Comparatively Rate
Yourself on each Factor

Compute Competitiveness
Estimates

21
Identify Success Factors

For this particular opportunity (set of

customers, product, market), what would
make anyone in our industry more
competitive (i.e., more likely to be
successful)? What would the ideal
marketer need to have to compete
successfully for this opportunity?

22
Common Success Factors
▪ Marketing excellence
▪ Strong fit between product
features & benefits sought by
customers
▪ Brand awareness
▪ Brand credibility
▪ Strong sales force
▪ Access to distribution
channels
▪ Strong customer and field
service
▪ Low price
▪ Innovative design skills
▪ Low barriers to entry for us
▪ High barriers to entry for
competitors
▪ Proprietary technology
▪ Patent protection
▪ Low production costs
▪ Low labor costs
▪ Production capacity
▪ Production flexibility
▪ Product certification
▪ Access to capital
▪ Financial resources
▪ Government support
23
Competitiveness Assessment

Identify Success Factors

Segment by Segment

Determine Relative
Importance

Comparatively Rate
Yourself on each Factor

Compute Competitiveness
Estimates

24
Competitiveness Estimate
for Brazilian Bank
Segment: __________________
Sub-prime credit card customers
Success Factors Importance
Weight
Low annual fee 12

Low interest rates 5

Low documentation requirements 18

Sales representatives 15

Department store relationship 7

Telemarketing 15

Brand reputation of the bank 8

Breadth of branch distribution 20

100

25
Competitiveness Estimate
for Brazilian Bank
Segment: Middle class credit card customers
__________________

Success Factors Importance

Weight
Reward programs 12
Telemarketing 20

Sales representatives 8

Low annual fee 15

Promotions 11
Merchant relationship 7
Large business scale 9
Electronic services 6
Bank brand reputation 8
Electronic marketing 4

100

26
Competitiveness Assessment

Identify Success Factors

Segment by Segment

Determine Relative
Importance

Comparatively Rate
Yourself on each Factor

Compute Competitiveness
Estimates

27
Comparative Scoring

Relative strength on this factor Score

“We are among the worst” 2 points
“We are about average” 4 points
“We are well above average” 6 points
“We are almost the best” 8 points
“We are by far the best” 10 points
Competitiveness Estimate
for Brazilian Bank
Segment: __________________
Sub-prime credit card customers
Success Factors Importance Relative
Weight Score
Low annual fee 12 4

Low interest rates 5 6

Low documentation requirements 18 7

Sales representatives 15 8

Department store relationship 7 9

Telemarketing 15 5

Brand reputation of the bank 8 7

Breadth of branch distribution 20 8

100

29
Competitiveness Estimate
for Brazilian Bank
Segment: Middle class credit card customers
__________________

Success Factors Importance Relative

Weight Score
Reward programs 12 0
Telemarketing 20 4

Sales representatives 8 6

Low annual fee 15 4

Promotions 11 3
Merchant relationship 7 3
Large business scale 9 4
Electronic services 6 0
Bank brand reputation 8 7
Electronic marketing 4 0

100

30
Competitiveness Assessment

Identify Success Factors

Segment by Segment

Determine Relative
Weights

Comparatively Rate
Division on each Factor

Compute Competitiveness
Estimates

31
Competitiveness Estimate
for Brazilian Bank
Segment: __________________
Sub-prime credit card customers
Success Factors Importance Relative Weighted
Weight Score Score
Low annual fee 12 4 48

Low interest rates 5 6 30

Low documentation requirements 18 7 126

Sales representatives 15 8 120

Department store relationship 7 9 63

Telemarketing 15 5 75

Brand reputation of the bank 8 7 56

Breadth of branch distribution 20 8 160

100 Competitiveness
estimate: 678
32
Competitiveness Estimate
for Brazilian Bank
Segment: Middle class credit card customers
__________________

Success Factors Importance Relative Weighted

Weight Score Score
Reward programs 12 0 0
Telemarketing 20 4 80

Sales representatives 8 6 48

Low annual fee 15 4 60

Promotions 11 3 33
Merchant relationship 7 3 21
Large business scale 9 4 36
Electronic services 6 0 0
Bank brand reputation 8 7 56
Electronic marketing 4 0 0

100 Competitiveness
estimate: 334
33
 Attractiveness/Competitiveness
Matrix

Competitiveness Estimate
1000

666

Attractiveness
Score
333

0
0 333 666 1000
34
 Attractiveness/Competitiveness
Matrix

Competitiveness Estimate
1000

666 Middle
Premiu
Class Sub-
m
prime
Attractiveness Travel
Score
333

0
0 333 666 1000
35
General Principle:
Allocate resources across segments/
opportunities as a function of expected ROI

Competitiveness
1000

$$
Attractiveness
$$
$
666

$ $$

333
x

0
0 333 666 1000

36
General Principle:
Allocate resources across segments/
opportunities as a function of expected ROI

Competitiveness
1000

$$
Attractiveness
$$
$
666

$ $$

333
x

0
0 333 666 1000

37
Principle 1:
Focus on opportunities that rate high on
both attractiveness and competitiveness
Competitiveness
Attractiveness 1000

666

333

0
0 333 666 1000

38
Principle 2:
Consider divesting from or “milking” segments
that score low on both attractiveness and
likelihood of success
Competitiveness
Attractiveness 1000

666

333

0
0 333 666 1000

39
Principle 3:
Keep a balance of (a) secure cash-generating
options and (b) promising cash-absorbing
opportunities such that (a) support (b)

Competitiveness
Attractiveness 1000

B
B

666
A

A
333

0
0 333 666 1000

40
Principle 4:
Try to increase your competitiveness for
the most attractive opportunities

Competitiveness
1000
Attractiveness

666

333

0
0 333 666 1000

41
Improving Competitiveness for Flower
Company

Segment: __________________
Corporate decoration
Success Factors Importance Relative Weighted
Weight Score Score
Variety of arrangements 10 5 50

Timing of deliveries 15 3 45
Corporate relationships 15 3 45
Onsite support/ consultation 30 1--> 6? 30 --> 180
Local branches 30 0 --> 4? 0 --> 120
100 Competitiveness
estimate: 170 -> 440

42
Principle 5:
Attractiveness may sometimes be increased
through refined segmentation

Competitiveness
1000
Attractiveness

666

333

0
0 333 666 1000

43
Conclusions

▪ Use multiple criteria to assess market

segment attractiveness
▪ Take into account competitiveness
(likelihood of success) and be explicit and
realistic about success factors
▪ Use Attractiveness x Competitiveness
Matrix to prioritize and allocate resources
across segment opportunities

44