Transcript Framework for Market Opportunity

Framework for Market Opportunity
Seed Opportunity in Existing New Value System
Identify Unmet and Underserved Need(s)
Identify Target Segment(s)
Declare Company’s Resource-Based
Opportunity for Advantage
Assess Competitive, Technological, and Financial
Opportunity Attractiveness
Make “Go / No-Go” Assessment
Framing the Market Opportunity
Leverage the Internet to Improve the
Consumer Car-Buying Process
Car Buyers Are Dissatisfied With Current
Retail Car-Buying Process
Shoppers Who Feel Intimidated by Sales
People and Look for More Efficient Way
Microsoft’s Software and Free Placement on
All Its Websites
How Big Is the Online Car-Buying Market?
Who Are CarPoint’s Main Competitors?
Make “Go / No-Go” Assessment
• MSN CarPoint identified an opportunity to leverage the
Internet to deliver customer value in the car industry
• The retail car-buying process was frustrating and
inefficient:
• Little information available to the consumer
• Bargaining with salesperson viewed as an hassle
• Long process overall
• MSN CarPoint selected two primary target
segments for its service:
• “The intimidated by the process”
• “The information seekers”
• MSN CarPoint could leverage Microsoft’s expertise
in software development, its brand name and its
multitude of online properties
• Competition was getting fierce with more and more
online car services entering the market…
• But the financial opportunity was large: 66% of
new car buyers were estimated to use online
services in 2000
• In 1996, the first version of CarPoint was shipped
• By 1998, CarPoint was driving $5 million in car
sales a day
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Competition Occurs Across Industry Boundaries
Rather Than Within Industry Boundaries
– Web-enabled business models often lack the
constraints of physical product manufacturing and service delivery
– Can match value creation from the customer’s perspective
– Ex. CarPoint: customer can

Research

Purchase

Finance

Obtain insurance
– all at one place

Lesson:
Do not limit opportunity assessment to narrow or traditional definitions of
industry or value systems

Competitive Developments and Responses are Occuring at an
Unprecedented Speed
– Advances in technology and the adoption of Creative Business Models
are occuring rapidly!
– Ex. Browser Wars

Microsoft vs. Netscape in late ‘90s
– Q: How often do you think new versions appeared?
– A: Approximately every six months.

Lesson: Keep abreast of important trends that could redefine opportunity
attractiveness.

Consumer Behaviour is Easier to Influence and Change
– Companies can introduce products that lead to new behaviour and
customer requirements
– What companies have greatly influenced the music industry and how?;
What technology have these companies taken advantage of?;
What other industries have also been affected by this trend and how?

Competition occurs between alliances of companies rather than
between Individual Companies
– Ex. Browsers depend on operating systems, PCs and modem
technologies
– Co-opetition

Companies as both competitors and collaborators

Industry Value Chains, or Systems are Rapidly being Reconfigured
– What are some ways in which the Internet has allowed businesses to
reconfigure customer interaction?

24/7 interactions

Increasing the level of information throughout the value chain

Eradicates or reduces the cost of some value chain stages
– Ex. Job Placement / Executive Recruiting industry

Now a two-way exchange (employers search resumes; job seekers search
postings)
– Greatly enhances the access and reach of individuals in this
marketplace

Value Systems
– An interconnection of processes and activities within and among firms that
creates benefits for intermediaries and end consumers
– entire chain of suppliers, distributors, competitors, buyers and intermediaries
– Often a value system can be reinvented in the networked economy
Three Value Types for new business possibilities
1. Trapped Value
– Unlock trapped value by creating:
– A. more efficient markets by lowering search and transaction costs

(How does Lending Tree (www.lendingtree.com) do this?)
– B. more efficient value systems by compressing or eliminating steps
in a current value system

ex. distribute in-house, technical documents over the web
Three Value Types for new business possibilities
2. New-to-the-World Value
– Enhance an existing offer or become the basis for a new offer by:
– A. Customizing Offerings

Weather.com

How does Quicken.com do this?
– B. Building Communities

What are some community building tools
look at myfamily.com for examples

Q: What marketing lever is best exploited through community
building?

A: Viral Marketing
– C. True New-to-the-World Functionality or Customer Experience

Most famous example is Napster with file-sharing (peer-to-peer)
and the MP3 file format
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How does net2phone.com create true new-to-the-world functionality

Three Value Types for new business possibilities
3. Hybrid Value
– synergy between both Trapped and New-To-The-World Value by:
– A. Disrupting Current Pricing by creating transparency in the retail
industry and offering unbiased information

What are two ways in which mysimon.com does this?
– B. Enabling Ease of Access by creating portal sites (ex
abebooks.com) or internet channels for existing stores (ex. Target.com)
– C. Radically Extending Reach by extending the boundaries of an
existing market or creating a new market by delivering more costeffective reach

any distance learning site
Exhibit 2–2: Three Types of Basic Value
Trapped Value
New-to-the-World Value



More efficient
markets
More efficient
value systems


Disrupt
pricing
Ease
access
Radically
extend
reach
Hybrid Value

Customize offerings

Build community

Introduce new
functionality or
experience