Here’s the scenario. You’re a Product Leader, with a relatively newly launched app at a relatively small startup. You’ve gained a loyal, core customer base and are well established within your niche. But now you’ve found that growth is slowing down, and you need to look for new potential customers in adjacent markets.
That’s when it’s time for a killer market opportunity analysis.
What Is Market Opportunity Analysis
Market opportunity analysis is a process that allows you to discover ways to expand into new market segments by revealing both the potential revenue streams and the potential access points.
This analysis aims to ask and answer important questions for anyone who wants to scale a product or business:
- Which other segments of the market are the most profitable?
- How fast are they growing?
- How do we compare to the competition in those segments?
- What potential access points are there?
The benefits for Product Managers
Having the results of a killer market opportunity analysis at your fingertips is endlessly helpful as a Product Manager.
Ensuring product-market fit. You need to be sure that you’re building the right thing, at the right time, for the right people. Having no product-market fit is the quickest way to make sure your product fails, and fails hard.
Saying no to bad ideas. Product People are magnets for other people’s ideas. Everyone has their opinions on which features should be built next, and it’s hard to say no without being able to say why. Especially when the idea comes from the top down.
If you can demonstrate that there’s no market demand for the feature, or that it’s just not the right feature for right now, it’ll free you up to build what matters instead.
Finding a surprising pivot. If your product/feature/company is very young, conducting further, more in-depth market research and opportunity analysis might reveal a surprisingly lucrative pivot. It’s exactly what happened to Google when they were building Files to launch in India.
You might also be interested in: Pivot to Profit – Lessons from Nearly Failed Products
Step by Step: How to Conduct a Marketing Opportunity Analysis that ROCKS!
Step1: Identify opportunities
The first step is of course to identify which opportunities are worth investigating further. As a Product Manager, it’s likely that this decision has already been made for you by c suite or upper leadership. Or at least the options will have already been narrowed down for you.
The types of opportunities you’ll be investigating could be…
- A way to break into an entirely new market (a new country, the B2B space in your industry, etc)
- A way to reach new customers within your market
- A way to address an unmet user need
- A way to improve your current offering
Identifying which opportunities to explore involves connecting the potential benefits of expanding into that market with the goals of the existing business strategy. It’s important not to break into new markets ‘just because’, as resources are finite. You need to spend them on the smartest decisions.
Of course, if a new opportunity is rich enough, it could call for an overhaul of the business strategy. But that’s a conversation for another time.
Step 2: Deep dive on the customers
Being customer-driven is a Product Manager’s bread and butter. So one of the first things you should do when exploring a new market is to dive in and really understand the customers.
One of the biggest mistakes you can make as a PM when leading a product or service into a new market, is to assume that your new customers will be the same as your existing customers. Let’s say you’ve an eCommerce app for a footwear brand. You could think to yourself ‘shoes are shoes, and shoppers are shoppers.’ But the buying habits, customer service expectations, and digital literacy of your new potential customers could be completely different to the customers you’ve been serving thus far.
Start getting to know them by conducting user interviews and sending out surveys. Never assume that you already know who they are and how they behave before you meet them.
Step 3: Measure both external and internal factors
When looking into new business opportunities, there are plenty of external factors that you need to take into account. And you can figure out what they are by conducting a STEEP analysis, which looks at Social, Technological, Economical, Environmental, and Political factors which may impact your decision making.
Market opportunity analysis involves looking in as well as looking out. Before understanding which opportunities to pursue, you need to make sure your business is actually positioned to pursue them. For that, you need to have a full understanding of where your business is at the moment, and the direction it’s going in the near future.
You might be poised to take on a new market now, but what about in 6 months time? Or 1 year? New market opportunities are long-term ventures, so it’s important to pursue those that fit into your company’s long-term plans.
Step 4: Understand the competitive landscape
As anyone in the tech industry will tell you, being the first is often more important than being the best. If you have competitors who are already filling the need or solving the problem, it’ll take more resources to differentiate yourself from them.
If you’re breaking into a competitive market, you need to be sure that your USP (Unique Selling Point) is strong enough to ensure you can secure market share.
Make sure that your market opportunity analysis includes an analysis of your competitors. What they’re doing right, what they’re doing wrong, and how you can differentiate yourself in order to stand out and win customers.
What To Do With Your Findings
Build new user personas
You should already have user personas for your existing customers, so it only makes sense that you create more for your newly-discovered customers. Building user personas is the perfect way to humanize your users, and they’re useful to a multitude of people in your organization, from sales and marketing to design and platform.
Create a case study
If you’re passionate about a certain opportunity, and you truly believe it’s the best decision for your business, you need people to buy-in to your vision. A case study can be a persuasive tool for getting that buy-in.
Share your findings cross-functionally
Everyone in a company benefits from data, and you never know who would work magic with it. For example, your marketing teams can use it to explore potential marketing strategies, and your sales team will likely be keen to identify new distribution channels.
Democratising your findings and making them widely available will help you to gain alignment, and you’ll benefit from having a multidisciplinary perspective on the insights that the data reveals.
Read to Learn More?
If you’re looking to get more business-savvy, check out this great talk by LinkedIn PM, Ankit Desai on Market Research to Drive Product Strategy…