Just because you build it, does not mean that “they” will come. The “they” is a given market audience. Start-ups need to begin their business strategy process by first identifying the precise definition of their organization, their mission statement, and their distinct competencies team with an assessment of the organization’s strengths and weaknesses (SWOT Analysis). Once these factors have been accurately procured, the organization must conduct an “Opportunity Analysis.”
An “Opportunity Analysis” consists of three interrelated activities:
- Opportunity Identification
- Opportunity-Organization Alignment
- Opportunity Evaluation
Opportunities come into fruition as you identify new types of buyers (consumers), finding unsatisfied or the under-served needs of buyers. Opportunity analysis zeros in on recognizing markets that your organization can profitably serve.
To help define “opportunity identification,” we can use an illustration of Reebok International, Ltd.’s discipling approach. In 1981, Reebok registered sales in the amount of $1.5 million and was known primarily for its high-quality customer running shoes. At that time, consumer interest in running had arrived at its pinnacle. That being the case, Reebok had to look for new opportunities in order to attain continued growth. Over the course of the next 28 years, Reebok strategically pursued opportunities based on buyer types, buyer needs, and technological innovation as a way for satisfying the needs of buyers. Reebok identified buyer “performance-oriented” needs with a keen eye on specific athletic activities, (tennis, golf, basketball, and track) and “non-athletic” needs with a focus upon fashion, comfort, and style for three buyer types – men, women, and children. Technological innovation, most recently with the launch of Rbk Custom in 2008, an Internet-based customization platform, has met the needs of buyers most interested in fit and comfort. In all, Reebok expanded its global marketing reach following a merger with Adidas in 2006, and in 2010 posted international sales of $3.5 billion annually with about half its sales outside of the U.S. borders (Kerin & Peterson, 2010).
Opportunity-organization aligning determines whether an identified market opportunity is accurately aligned with the definition of the firm’s business, mission statement, and distinctive competencies. This actuation commonly involves an assessment of the firm’s strengths and weaknesses and an identification of the success requirements for operating profitably in a given market sector. A SWOT Analysis is often conducted to determine the alignment between identified market opportunities and the firm’s strengths and weaknesses.
For some organizations, market opportunities that promise sizeable sales and profit gains are not pursued because they do not conform to the firm’s character traits. For example, Starbucks built a rapidly evolving organization serving freshly brewed, specialty gourmet coffee. With this being so, Starbucks refrains from using artificially flavored coffee despite the company’s growth. According to company chairman Howard Schultz, “A large segment in our category is artificially flavored coffee; it would give us maybe 40 percent incremental volume, but we won’t do it.” He adds, “It’s not in our DNA.”
Opportunity evaluation commonly has two distinct phases – qualitative and quantitative. The qualitative phase focuses on aligning the attractiveness of an opportunity with the potential for revealing a particular market niche.
Attractiveness is dependent on these five components:
- Competitive activity.
- Buyer requirements.
- Market demand and supplier sources.
- Social, political, economic, and technological forces.
- Organizational capabilities.
Each of these five components in turn must be anchored to its impact on the types of consumers sought, the needs of the consumers, and the means for satisfying these needs. The quantitative phase yields estimates of market sales potential and sales forecasts. Additionally, the qualitative phase produces budgets for financial, marketing, human, and production resources, which are essential to assess the overall profitability of a given prospective market opportunity.
Kerin, R. A. & Peterson, R. A. (2010). Strategic marketing problems. Cases and comments. (12th ed.). Upper Saddle River, NJ: Prentice Hall.[DISPLAY_ACURAX_ICONS]