market opportunity & analysis part 2

Market Opportunity & AnalysisMarket Opportunity & AnalysisPart 2Part 2

CPS 181s

Jan 21, 2003

Future Case StudiesFuture Case StudiesFuture Case StudiesFuture Case Studies

500 words initial post and each responseRaise questions, point out contradictionsWhat was fascinating, what did you struggle to

understand?Extrapolate future areas of inquiryFocus on ideas, depth and critical analysisUse other resources for research

GradingGradingGradingGrading

Each Case Study (9) - 40 pointsCase Discussion Leader - 50 pointsIn-Class Assignments - 80 pointsClass Participation - 50 pointsMidterm Project Progress Report - 100 pointsFinal Project Presentation - 400 points

Total = 1040 points

Tools & Techniques to Determine Tools & Techniques to Determine Where Will Business Compete?Where Will Business Compete?

Tools & Techniques to Determine Tools & Techniques to Determine Where Will Business Compete?Where Will Business Compete?

Customer needs?Financial opportunity?Competitors?Company resources or partners to fulfill

needs?

Framework for Diagnosing Market OpportunityFramework for Diagnosing Market OpportunityFramework for Diagnosing Market OpportunityFramework for Diagnosing Market Opportunity

What is the Playing Field for the Business?What is the Playing Field for the Business?What is the Playing Field for the Business?What is the Playing Field for the Business?

Identify Unmet and Underserved NeedsIdentify Unmet and Underserved NeedsIdentify Unmet and Underserved NeedsIdentify Unmet and Underserved Needs

Identify Target Customer SegmentsIdentify Target Customer SegmentsIdentify Target Customer SegmentsIdentify Target Customer Segments

Company’s Capabilities that Bring Company’s Capabilities that Bring Opportunity or AdvantageOpportunity or Advantage

Company’s Capabilities that Bring Company’s Capabilities that Bring Opportunity or AdvantageOpportunity or Advantage

Assess Competitive, Technical and Financial Assess Competitive, Technical and Financial Opportunity AttractivenessOpportunity Attractiveness

Assess Competitive, Technical and Financial Assess Competitive, Technical and Financial Opportunity AttractivenessOpportunity Attractiveness

Make Go / No Go AssessmentMake Go / No Go AssessmentMake Go / No Go AssessmentMake Go / No Go Assessment

5 ConditionsTo Satisfy

Does Segmentation Matter?Does Segmentation Matter?Does Segmentation Matter?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?

Honda vs BarneysHonda vs BarneysHonda vs BarneysHonda vs Barneys

Which is Better? Which is Better? Analysis vs No AnalysisAnalysis vs No Analysis

Which is Better? Which is Better? Analysis vs No AnalysisAnalysis vs No Analysis

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

Trapped Value vs New ValueTrapped Value vs New ValueTrapped Value vs New ValueTrapped Value vs New ValueCreate more efficient

marketsCreate more efficient

delivery (value) system

Enable ease of access

Disrupt current pricing power (consumer power)

Customize offeringsRadically extend

reach and accessBuild communityEnable collaboration-

across people, location, time

New functionality or experience

The Consumer Decision ProcessThe Consumer Decision ProcessThe Consumer Decision ProcessThe Consumer Decision Process

Model of On-line Consumer Model of On-line Consumer BehaviorBehavior

Model of On-line Consumer Model of On-line Consumer BehaviorBehavior

ToolsToolsToolsTools

Segment Prioritization Chart?

Schedulable inAdvance (e.g.,

Family Vacation)

Flexible Event(e.g., Going

Home)

Last Minute(e.g., SurpriseBirthday Party)

All Other

Families withChildren

All Other

Families withChildren

All Other

Segment Prioritization ChartSegment Prioritization ChartSegment Prioritization ChartSegment Prioritization Chart

Personal

Business

Groups

Low – Middle

Income / Not Frequent

Fliers

Middle – Upper

Income / Frequent

Fliers

Students

Retirees

Trip Purpose

FlexibilityWho

RetireesRetirees

Business Trips

Students on Students on VacationVacation

Group Trips

All Other Trips

Low / Mid Low / Mid Income Families Income Families

on Vacationon Vacation

Students Going Students Going HomeHome

Other Low / Mid Other Low / Mid Income on Income on VacationVacation

High Income Families on

Vacation

Low / Mid Low / Mid Income on Income on GetawaysGetaways

Last MinuteLast Minute

De

mo

gra

ph

ics

an

d B

eh

av

ior

Occasion

= Primary Focus = Approximately 45%–55% of the Total Market

Total Number of Trips = 45%–55% of the Market

Total Number of Trips = 45%–55% of the Market

High Income Non-Family Trips


Segment Prioritization ChartAnalyze which customer segments to pursue


Segment Prioritization Chart

Competitor Maps (egg diagram)

Competitor Profiling — Eastman KodakCompetitor Profiling — Eastman KodakCompetitor Profiling — Eastman KodakCompetitor Profiling — Eastman Kodak

Eastman Kodak

PurchaseCamera

Purchase Film

Take Pictures

Digitally ManipulatePictures

Print and Receive Pictures

SharePictures

Store Pictureson CD

Purchase Accessories

Download and Choose Pictures to

Print

HP

Olympus

Snapfish

Moto Photo

Geocities

Seattle Filmworks

District

Ofoto

HP

AdobeSystems

Fuji

cameraworks.com

Snapfish

Shutterfly

Direct Competition

IndirectCompetition


Segment Prioritization Chart

Competitor Maps (egg diagram)Underserved areas competitor strengths potential collaborators


Segment Prioritization Chart Competitor Maps (egg diagram)Competitor Mapping to Selected Customer

Segments

Competitor Mapping to Selected Segments for Competitor Mapping to Selected Segments for PricelinePricelineCompetitor Mapping to Selected Segments for Competitor Mapping to Selected Segments for PricelinePriceline

High performance level Medium performance level Low performance level


Segment Prioritization Chart Competitor Maps (egg diagram)Competitor Mapping to Selected Customer

SegmentsUnconstrained opportunities segment interactions growth potential


Segment Prioritization ChartCompetitor Maps (egg diagram)Competitor Mapping to Selected Customer SegmentsOpportunity Assessment Chart

Priceline.com Overall Opportunity AssessmentPriceline.com Overall Opportunity AssessmentPriceline.com Overall Opportunity AssessmentPriceline.com Overall Opportunity Assessment

PositiveFactor

NeutralFactor

NegativeFactor

CompetitiveVulnerability

TechnicalVulnerability

Magnitude ofUnmet Need

InteractionBetween

Segments

Likely Rate ofGrowth

TechnologyVulnerability

Market Size Level ofProfitability


Segment Prioritization ChartCompetitor Maps (egg diagram)Competitor Mapping to Selected Customer SegmentsOpportunity Assessment Chart

Overall effect considering all factorsManagers assess magnitude of company’s impact

Go/No-Go Assessment (Opportunity Story) Go/No-Go Assessment (Opportunity Story) =Rough Draft of Business Plan=Rough Draft of Business Plan

Go/No-Go Assessment (Opportunity Story) Go/No-Go Assessment (Opportunity Story) =Rough Draft of Business Plan=Rough Draft of Business Plan

Describe target segment within selected value systemArticulate high-level value systemSpell out customer benefitsIdentify critical capabilities and resources needed to deliver

customer benefitCategorize critical capabilities as in-house, build, buy, or

collaborateDescribe 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.comSchwab.comLaunched January 15, 1998Launched January 15, 1998

Schwab.comSchwab.comLaunched January 15, 1998Launched January 15, 1998

Schwab: Unmet and Underserved Needs (1997 Timeframe)Schwab: Unmet and Underserved Needs (1997 Timeframe)Schwab: Unmet and Underserved Needs (1997 Timeframe)Schwab: Unmet and Underserved Needs (1997 Timeframe)

Plan Savings GoalPlan Savings GoalPlan Savings GoalPlan Savings Goal

Determine Optimal Asset AllocationDetermine Optimal Asset AllocationDetermine Optimal Asset AllocationDetermine Optimal Asset Allocation

Receive Ideas and RecommendationsReceive Ideas and RecommendationsReceive Ideas and RecommendationsReceive Ideas and Recommendations

Place OrderPlace OrderPlace OrderPlace Order

Sell StockSell StockSell StockSell Stock

Research StocksResearch StocksResearch StocksResearch Stocks

Track Portfolio PerformanceTrack Portfolio PerformanceTrack Portfolio PerformanceTrack Portfolio Performance

Receive DividendsReceive DividendsReceive DividendsReceive Dividends

Unmet and Underserved Needs

Planning tools to simplify goal setting

Tax ReportingTax ReportingTax ReportingTax Reporting

Aggregation of investment information

Place order and track status anytime, anywhere

Access real time account information

Place order and track status anytime, anywhere

Download to tax software

Education on investing

Process Steps

Schwab — Opportunity Attractiveness vs. Schwab — Opportunity Attractiveness vs. Resource AvailabilityResource AvailabilitySchwab — Opportunity Attractiveness vs. Schwab — Opportunity Attractiveness vs. Resource AvailabilityResource Availability

High

Low High

Low

Opportunity Attractiveness

Resource Availability

Note: Opportunity attractiveness based on competition level and opportunity financials

Full Management

Low Price

Quality Advice

Customer Service

Quality Information

Schwab Resource AvailabilitySchwab Resource AvailabilitySchwab Resource AvailabilitySchwab Resource AvailabilityCompany Capabilities Partner Capabilities Overall

Segments

Capability highly addressing segment need

Capability moderately addressing segment need

Capability not addressing segment need

Demographic Geographic Needs-based Clickthrough-

based

Meaningful

Actionable - Online

Actionable - Offline

Substantial

Measurable

Effectiveness of Different Segmentation MethodsEffectiveness of Different Segmentation MethodsEffectiveness of Different Segmentation MethodsEffectiveness of Different Segmentation Methods

= Low = High

Segmentation MethodsSegmentation

Criteria

Needs Based Segmentation: Charles SchwabNeeds Based Segmentation: Charles SchwabNeeds Based Segmentation: Charles SchwabNeeds Based Segmentation: Charles Schwab

Source: Jeffrey Veen, Hot Wired Style, Monitor Analysis

“Saving For a Goal”“Saving For a Goal”

Saving for retirement

Saving for college

Saving for house down payment

Saving for retirement

Saving for college

Saving for house down payment

“Traders”“Traders”

Hobby investors

Active traders

Hobby investors

Active traders

“Financial Planning”“Financial Planning”

Estate planners

Tax planners

Trust fund managers

Estate planners

Tax planners

Trust fund managers

Schwab’s market segments fall into three categories

Professional<$150k

Professional>$150k

Professional<$150k

Professional>$150k

Schwab Segmentation (1997 Timeframe)Schwab Segmentation (1997 Timeframe)Schwab Segmentation (1997 Timeframe)Schwab Segmentation (1997 Timeframe)

Buy and Hold

Current Offline Schwab

Customer

High Net Worth (<$1M)

Mar

ried

No

t S

ch

wa

b C

us

tom

er

Other White Collar

Frequent Trades

Sin

gle

Blue Collar

RetireeUniversity Student

Ch

ild

ren

> 3

0N

o

Ch

ild

ren

< 3

0

Mature( > 55)

High Priority Secondary Priority Tertiary Priority De-emphasize

Segments Schwab Merrill Lynch Ameritrade DLJ Direct

High Net Worth

Independent financial advisors

Advice for platinum members

High quality information service

Advice and access to analysis

Portfolio management

No advice

Limited research

Bare bones service

Comprehensive research

High quality service

Service professional assigned to clients with at least $1M in assets

Buy and Hold (>$150K)


High level of service

Moderate price

High price

Access to analysis

Lowest price ($8 / trade)

Limited research tools (company profiles and earnings estimates)


IPO center allowing investors to participate in IPOs

Moderate price

Frequent Traders (<$150K)

High quality of information

Reduced prices for frequent traders

Multiple channels for trading (phone, on-line, branch)

Eventually:

Velocity software (introduced August 1999)

Very high price

Lowest price ($8 / trade)

Limited research

Eventually:

Multiple channels for trading (including online, telephone, web and wireless)

Free real-time quotes and current financial news

No price reduction for frequent traders

Eventually:

Marketspeed 3.0 providing faster trade execution

Wireless alerts and trading

Real-time quotes, streaming news

High performance level Medium performance level Low performance level

Schwab — Competitor Map to SegmentsSchwab — Competitor Map to SegmentsSchwab — Competitor Map to SegmentsSchwab — Competitor Map to Segments

Schwab.com Overall Opportunity AssessmentSchwab.com Overall Opportunity AssessmentSchwab.com Overall Opportunity AssessmentSchwab.com Overall Opportunity Assessment

PositiveFactor

NeutralFactor

NegativeFactor

CompetitiveVulnerability

TechnicalVulnerability

Magnitude ofUnmet Need

InteractionBetween

Segments

Likely Rate ofGrowth

TechnologyVulnerability

Market Size Level ofProfitability

Case Study – Virtual VineyardsCase Study – Virtual VineyardsCase Study – Virtual VineyardsCase 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?

market opportunity & analysis part 2

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