Chasing after every ‘next big idea’ that comes along isn’t smart.
But you know what is?
Staying aware of the market opportunities that are ripe for plucking. 🍒
To do that, you’ll need to routinely conduct a market opportunity analysis. This can be one of those tricky tasks you perform just often enough to need some direction on, but not so often enough to feel compelled to establish a process for.
That’s where we come in.
We’re here to answer:
- What a market opportunity analysis is.
- Why it’s important to conduct one periodically.
- Who should perform your opportunity analysis.
- What the process looks like.
What is a market opportunity analysis?
A market opportunity analysis is a process for evaluating the potential of a new market, as well as for identifying opportunities in markets you’re already a part of. These could include reaching more customers and growing your market share. Or moving into a completely new market.
As part of the process, you’ll figure out who your competition is, learn all about your customers and their needs and wants, and tie this back to your business’ current position. That last part’s important because it’ll allow you to evaluate the size of the growth opportunity you’re looking at.
There are similarities with SWOT analysis (strengths and weaknesses, opportunities and threats), in that you’ll be getting the lay of the competitive landscape and looking for threats to your business hidden within the opportunities you uncover. At the end, you’ll be in a great position to prioritize business ideas and make more informed strategic decisions.
Why is market opportunity analysis (MOA) important?
Conducting market opportunity analyses at frequent intervals helps you keep your finger on the pulse of your relevant market. When new opportunities arise, you’ll have a process for becoming aware of them quickly, analyzing them, and deciding whether to pursue them or not.
1) It identifies new markets and their profit potential
Even if you’re dominating your market, other opportunities out there can take your growth to the next level. Capitalizing on these provides much-needed cushioning in times of uncertainty.
Fortune favors the bold, as they say, and those that push even harder when the going’s good are often the ones that survive the following downturn.
Your market analysis will uncover these opportunities and help you quantify their value to your business, so you can prioritize which you pursue first to offer even more value to your customers, building trust and brand loyalty.
2) MOA reduces risk and uncertainty
What you don’t know can’t hurt you.
At least … that’s what we’d like to believe.
In truth, what you don’t know constitutes uncertainty and risk. All else being equal, more informed decisions are better decisions, so it pays to make yourself as informed as you can.
Your market opportunity analysis does more than just uncovering opportunities. It makes you aware of the opportunities that exist for your competitors, too. It can teach you the wants and needs of your customers, as well as how good of a job you’re doing at meeting those needs at present.
All of this is valuable information that reduces uncertainty. Where there’s less uncertainty, there’s a higher probability of success and, as a result, there’s less risk.
3) It leads to better strategic business decisions
When you analyze a market for opportunities, you come away with a stronger understanding of the market factors affecting your business growth.
You’ll have identified industry and market trends, know which are winding down and which are ripe for further growth. You’ll even know how you can capitalize on these to maximize your competitive advantage.
All this makes you more informed about the state of your business and your market. That means more informed, better business decisions, allowing you and your executive teams to get ahead of shifts in the market.
Whether consumer needs are changing, or competitors are pulling ahead by offering a feature you’re missing, you’ll become aware of these developments as they happen. As a result, you’ll be able to create a structured plan for mitigating threats and capitalizing on opportunities, ensuring a more secure future for you, your staff, and your stakeholders.
4) It alerts you to possible threats
Even if you don’t pursue a market opportunity, it’s better if that’s a conscious decision borne out of strategic necessity, rather than out of ignorance the opportunity exists.
Once you’re aware the opportunity is there, you know it also represents an opportunity for your competitors and, therefore, a threat to you.
This lets you know to keep an eye on your competitors and any moves they might make to pursue a given opportunity. It gives you a sense of the possible consequences to your own business and market share if they were to make it a success too.
Who should conduct a market opportunity analysis?
Given the various steps involved in a market opportunity analysis, it’s impossible to conduct one start to finish without involving multiple arms of the business.
For that reason, it’s a collaborative effort involving a cross-functional team, but it’s very much possible for you to do the majority of the market research alone. You’ll just have to consult with members of other departments toward the end of the process.
Their input on the ramifications of pursuing the opportunity will be important to hear, as will their feedback on what the implementation process will look like.
When it comes to this cross-functional team, you’ll want to involve:
- Executives, for input on their overall vision for the business, and how this new market opportunity might align (or not) with their goals and objectives.
- Accounting and finance, for their knowledge of cash flow, available budget for the new opportunity, and possible financial impacts on other pursuits.
- Product, for input on how the opportunity can be built into existing product development roadmaps, how fast you can bring the product to market, and on the opportunity cost to other features, products, and services.
- Marketing, for feedback on the knock-on effects for marketing strategy. As well as how messaging and positioning need to change, both for the new product and for the brand as a whole.
- Content, for insight into how you’ll educate customers about your new product and its benefits.
The five stages of opportunity analysis
The stages of a market opportunity analysis can be broken down into five stages.
- Perform detailed market research.
- Investigate your competitive landscape.
- Identify industry trends.
- Tie your findings back to your current business position.
- Scrutinize your shortlist of opportunities to prioritize them by business value.
1 - Perform detailed market research
The first step is to uncover what the market wants. That means talking with members of your target market.
When identifying new business opportunities, it all comes back to the customer. Even your competitors (your second-most important set of players) are just trying to deliver to the market what it wants.
Ask: How have things developed since you last checked in with your customers? Are your target audience’s unmet needs and pain points the same as when you last put together a product development plan? Is the customer base for this new opportunity even the same as the one you’re currently serving?
Primary research (that is, going direct to the source, engaging with customers via surveys and interviews) is the best place to start. But secondary research, like market reports, can help you gain a broader overview more quickly.
The better you understand the wants and needs of your chosen market, the better a position you’ll be in to determine which of their unmet needs you’re in a position to pivot and fill.
2 - Investigate your competitive landscape
Once you know what the market wants, your second order of business is to determine whether there’s space for you on the playing field.
Whether you’re looking to fill a newly developed need for your existing buyer personas, or whether you’re looking to serve a new base entirely, you’ll want to know how well existing products meet their needs.
If it’s an unmet need, chances are they’re not doing such a great job. But there are likely to be surprising alternatives at play already filling a similar function to some degree.
Uncover these to get a sense of how well-served the market is at present. While underserved markets often represent great opportunities (think “Blue Ocean Strategy”), you still want a good idea of why no one else has stepped up to fill that space.
When there are existing alternatives and competitors to examine, tie this back in with your customer research. What do customers like about their offering? Where does it fall short of the mark? Are there any surprising, alternative ways customers are ‘getting by’ you could learn something from? What do your competitors' pricing strategies look like?
When you step onto the field, each of these competitors will represent a threat to your success. Knowing where the pitfalls are will be key to your success.
3 - Identify industry trends
Third, it’s time to determine the opportunity’s longevity.
When you perform your customer research and competitor analysis, what you’re seeing is a snapshot in time. The strength of the opportunity right now may have no bearing on its strength in 12 months or 12 years from now.
That’s why it’s important to gather wider market intelligence and learn all about the current industry trends. This is where you can start to think about growth potential. Stepping into a market with a ton of growth potential is a good idea. Stepping into one that’s already in its decline is not - unless you have a very good reason to believe this decline will soon halt or even reverse into more growth.
Making calls like this accurately requires a lot of time, a lot of experience, and a lot of data. Calling on industry analysts and advisors for help is a very smart move that can save you a lot of money.
4 - Tie this back to your current business position
Now you’ve got a great sense of what the market wants, the alternatives that exist, and whether the market is trending for growth. It’s time to relate this back to your current position to assess the value of the opportunity for your business.
How much work would it be to pivot and take advantage of the new market? A lot? Or a little? Would you need only to adapt existing products? Or do you need to create entirely new products?
Beware of shiny object syndrome. It’s one thing to pivot and target a better opportunity than you were focused on before. It’s another to force your product into an exciting, high-growth market it doesn’t belong in.
Consider the threats to your success if you were to pursue the opportunity too. What’s the opportunity cost?
Of course, there are costs, downsides, and potential dangers to not taking action, too. Consider these with equal weight before deciding whether to shortlist the opportunity.
5 - Examine the business opportunities
Working through the above process should give you a list of opportunities that seem valuable to your business.
So, do you pursue one or all of them? Or none at all?
You can prioritize these opportunities by examining each one more closely.
i) The market: You know there’s an unmet need in the market. But what’s the size of that market? And is that market likely to get bigger or smaller with time?
You know there’s a market out there, but who are they? Build out detailed buyer personas for each segment of your customer base - what are their hopes and fears? What do they value? And, most importantly, does your brand have a shot at winning these people over?
ii) The competitors: Who will you be competing with? Are they strong where you’re weak? What angle of attack can you take with them to steal some of their market share? Or, is the market large enough that there’s plenty of room for both of you?
How similar will your solution look to ones already out there? What benefits will your solution bring to customers that competitors’ solutions currently don’t? And how easy do you think it’ll be for competitors to copy and improve upon your key differentiators?
A great opportunity won’t stay that way for long if you bring a great new idea to market, only for the existing ruler of the space to quickly bring out their own version that’s bigger and better.
In short, make sure you have a clear path to establishing a sustainable competitive advantage.
iii) Your own position: Ask yourself this: is pursuing this new thing really going to be more profitable for you in the long run than just doubling down on what you already do well?
A market opportunity analysis is beneficial for a ton of reasons. But the most exciting opportunities aren’t always the best ones.
Sometimes, it’s the small pearls of wisdom you pick up along the way - from talking to your customers, examining industry trends, and scrutinizing competitors - that have the most business value.
When you learn that, actually, the market consensus is that yours is the most innovative solution, but lacks a bit of UX polish, you’ve uncovered a quick win that could win you many new customers while costing very little. At least compared to pivoting into an entirely new space.
Where do you go from here?
By now, you have a shortlist of business opportunities, ordered by profit potential, business value, and the lengths you’ll have to go to capture them.
Now it’s time to:
🔁 Hold a sync meeting to get everyone on the same page.
🗣️ Schedule in time individually to give interested parties opportunities to voice concerns, feedback, and opinions.
🚀 Create and implement a Go-to-Market strategy.
Once these plans are in place, you can set about launching your new product, capturing new market share, and profiting from the new opportunities you’re pursuing.
Get the playbook on positioning your brand
Competitive insights can inform business strategy across all four corners of business. But when it comes to positioning your brand in a competitive market, there are pitfalls to sidestep, and best practices and processes to implement.
Inside the Competitive Positioning Playbook, we give you best practices and processes, covering:
⏰ How not to waste your internal resources and data sources to save yourself hours of time.
🧘 What “minimum viable positioning” is, and why it’s a key milestone early in the process.
🙅♀️ The three steps you must not skip in crafting competitive positioning.
These aren't just our opinions - we consulted with some of the best in the industry to put together these insights. (Oh, and it won't cost you anything).
Intrigued? Grab your copy today. 👇