Chapter

3
Understanding Market
Opportunities

McGraw-Hill/Irwin

Copyright 2013 by The McGraw-Hill Companies, Inc. All rights reserved.

Markets and Industries:

Whats The Difference?
A market is composed of individuals and

organizations who:
Are interested in and willing to buy a good or

service to obtain benefits that will satisfy a

particular need or
Who want and have the resources to engage in
such a transaction

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Markets and Industries:

Whats The Difference?
Market - Individuals or organizations who are

interested in and willing to buy a good or

service to obtain benefits that will satisfy a
particular want or need and have the
resources to engage in such a transaction
Industry - A group of firms that offer a product
or class of products that are similar and are
close substitutes for one another

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Exhibit 3.1 - The Seven

Domains of Attractive
Opportunities

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Assessing Market and Industry

Attractiveness
Macro-level - The analyses are based on

environmental conditions that affect the

market or industry, respectively, as a whole
Micro level - The analyses do not look at the
market or the industry overall but at
individuals in that market or industry

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Macro Trend Analysis: A Framework

for Assessing Market Attractiveness,
Macro Level
The demographic environment - While the

number of specific demographic trends that

might influence one marketer or another is
without limit, the following major global
demographic trends currently influence the
fortunes of many companies, for better or
worse:
Aging
AIDS
Imbalanced population growth
Increased Immigration

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Macro Trend Analysis: A Framework

for Assessing Market Attractiveness,
Macro Level
The sociocultural environment - Those that

have to do with the values, attitudes, and

behavior of individuals in a given society
Business ethics
Fitness and nutrition

The economic environment - Among the most

far-reaching of the six macro trend

components
Economic trends often work, to pronounced

effect, in concert with other macro trends

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Macro Trend Analysis: A Framework

for Assessing Market Attractiveness,
Macro Level
The regulatory environment:
In every country and across some countries
there is a regulatory environment within which
local and multinational firms operate
Political and legal trends, especially those that
result in regulation or deregulation, can have
powerful impact on market attractiveness

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Macro Trend Analysis: A Framework

for Assessing Market Attractiveness,
Macro Level
The technological environment: Technological

progress is unlikely to abate

Developments in telecommunications and

computing have led to the rapid convergence of

the telecommunications, computing, and
entertainment industries

The natural environment:

Turning problems into opportunities
Finding ways to save energy
Finding new energy sources

Opportunities in developing green products

Impact of depletion of natural resources
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Exhibit 3.9 - The Major Forces

that Determine Industry
Attractiveness

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Challenges In Macro-level
Market And Industry Analysis
In order to analyze the attractiveness of ones

market or industry, one must first identify

exactly which market or industry is to be
analyzed
On the market side, the challenge often lies in

sizing the relevant market

On the industry side, theres the question of
how narrowly or broadly to define ones
industry

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Challenges In Macro-level
Market And Industry Analysis
Information sources for macro-level analyses:
Trade associations and trade magazines
Websites of local, state, and federal
governments
The key outputs of a competent macro trend

analysis should include both quantitative and

qualitative data

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Understanding Markets at the

Micro Level
Some tests to be met for the market offering

to be attractive:

Theres a clearly identified source of customer

pain, for some clearly identifiable set of target

customers, which the offering resolves
The offering provides customer benefits that
other solutions do not
The target segment is likely to grow
There are other segments for which the
currently targeted segment may provide a
springboard for subsequent entry

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Understanding Industries at
the
Micro Level
Opportunities are attractive when the

company itself meets most or all of the

following tests:
It possesses something proprietary that other

companies cannot easily duplicate or imitate

The business has or can develop superior
organizational processes, capabilities, or
resources that others would find it difficult to
imitate or duplicate
Its business model is economically viable
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The Team Domains: The Key

to the Pursuit of Attractive
Opportunities
Opportunities are only as good as the people

who will pursue them

Some crucial questions
Does the opportunity fit what we want to do?
Do we have the people who can execute on

whatever it takes to be successful in this

particular industry?
Do we have the right connections?

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Mission, Aspirations, and Risk

Propensity
Everyone and every company has views on

how much risk is acceptable

A particular opportunity must also measure
up to the expectations of the people who will
pursue it
Whatever the tests for a given individual or
company, they must be met if an opportunity
is to be deemed attractive

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Its Who You Know, Not What

You Know
The people who are the best connected will

be the ones who are best placed to change

strategy before others know the winds have
changed
Having a well-connected team in place
enhances the attractiveness of the
opportunity itself
The team is more likely to be able to ride out

the inevitable winds of change

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Putting the Seven Domains

to Work
If you or your company chooses to pursue

unattractive opportunities, youll face tough

sledding
The seven domains are not additive
Opportunities dont just sit there
They change and may be further developed

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Anticipating and Responding

to Environmental Change
Impact and timing of event
Opportunity/threat matrix: Enables the
examination of a large number of events in
such a way that management can focus on the
most important ones

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Exhibit 3.17 - Opportunity/Threat Matrix

for a Telecommunications Company in
the UK in 2011

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Swimming Upstream or
Downstream: An Important
Strategic Choice
Trends will always be present, whether

marketing managers like them or not

The question is what managers can do about
them

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