Assessing Market and Industry Attractiveness

Presented By:
Saad Janjuah
Haseeb Minhas
Foqia Ali
Saqib Ilyas
Nauman Tahir
Zainab Riaz
 Macro Trend Analysis
A Framework for Assessing Market Attractiveness
The Demographic Environment:
• Population size: A larger and growing population indicates a potentially bigger customer base.
• Age distribution: Understanding the age demographics of the target market helps tailor
products and services accordingly.
• Income distribution: Distribution of wealth within the population influences purchasing power.
• Education level: Educational attainment can impact product adoption and consumption.

The Sociocultural Environment:

• Lifestyle trends: Shifts in consumer preferences and behaviors can open doors for new market
opportunities.
• Values and attitudes: Cultural values and social norms influence what people consider
desirable.
• Consumer confidence: Consumer optimism about the economy translates to higher spending.
The Economic Environment:
• Economic growth rate: A growing economy signifies rising disposable income and increased
consumer spending.
• Inflation rate: Inflation erodes purchasing power and can lead to cautious consumer behavior.
• Interest rates: Interest rate fluctuations impact borrowing costs and investment decisions.
• Exchange rates: Currency exchange rates affect import/export costs and the competitiveness
of foreign products.

The Regulatory Environment:

• Government regulations: Laws and regulations can impact market entry, product
development, and marketing practices.
• Taxation policies: Tax structures influence business profitability and consumer spending.
• Trade policies: Trade barriers and agreements affect the import/export of goods and services.
The Natural Environment:
• Sustainability concerns: Growing environmental awareness influences consumer
preferences and government regulations.
• Availability of natural resources: Resource scarcity can drive up costs and impact
production processes.
• Climate change: Environmental concerns can affect production costs, consumer behavior,
and government policies.

By systematically evaluating these macro-environmental factors,

businesses can gain valuable insights into the attractiveness of a
particular market and make informed decisions about entering or
expanding into it.
Porter's Five Competitive Forces
• Threat of New Entrants
• Bargaining Power of Buyers
• Bargaining Power of Supplier
• Threat of Substitute Products or Services
• Intensity of Competitive Rivalry

Challenges in Macro-Level Market and Industry

Analysis
• Technological Advancements
• Regulatory Environment
• Market Saturation
• Emerging Trends and Disruptions
Information Sources for Macro-Level Analysis
• Industry Reports and Market Research
• Government Publications and Regulatory Updates
• Trade Publications and Industry Conferences
• Financial Statements and Investor Presentations
• Academic Research and Journals

Markets at the Micro Level

• Consumer Behavior
• Supply and Demand
• Competitive Analysis
• Regulatory Environment
Industries at the Micro Level:
• Industry Structure
• Value Chain Analysis
• Technological Trends
• Market Segmentation

The Key to the Pursuit of Attractive Opportunities

• Specialized Knowledge
• Market Understanding
• Innovation and Creativity
• Risk Management
• Execution Capabilities
• Adaptability and Resilience
Mission, Aspirations, and Risk Propensity

Every company has a mission statement, and every entrepreneur has a clear idea of what they
want to achieve - whether it's software, business process outsourcing, running a retail shop, or
something else. Similarly, everyone has a sense of what size opportunity is deemed attractive.
Some companies won't pursue an opportunity unless it has the potential to reach $100 million in
sales, while others running lifestyle businesses may consider anything requiring more than 20
people to be too big. Additionally, companies and individuals have different views on acceptable
risk levels - are we willing to bet the ranch, mortgage the house, or risk a shortfall in quarterly
earnings? Ultimately, an opportunity must align with the expectations of those pursuing it, or they'll
simply say "no, this one's not for us."
 Sustainable Competitive Advantage
1 Imitable Recipes 2 Market Saturation 3 Importance of Differentiation
The craft beer industry in When growth in the craft This example highlights
the late 1990s is a good beer segment came to a
the importance of having a
example of the "no halt in 1997, a shakeout
ensued, and many craft truly differentiated product
sustainable advantage"
problem. Craft breweries brewers went out of or service that cannot be
were able to brew tasty, business. Their easily copied. Relying
unique beers, but the customer benefits -
solely on a great-tasting
recipes were easily great tasting beer - had
been replicated, and did product is not enough to
imitated, allowing many
followers to enter the not provide a ensure long-term success
fast-growing market. sustainable competitive
in a competitive market
advantage.
Critical Success Factors
Identifying CSFs Importance of CSFs
In every industry, there are a few CSFs are the few factors that truly matter, not
critical factors that separate the
things like money or customer service, which while
winners from the also-rans. These
are the industry's critical success important, are not necessarily critical. Identifying
factors (CSFs). To identify them, and excelling at the industry's CSFs is essential for
ask two key questions: success.
1. What decisions or activities, if done Assessing Opportunities
wrong, will have severely negative
effects on performance? When evaluating opportunities, you must identify the
industry's CSFs and determine if you have the
2. What decisions or activities, if done
competencies and capabilities to deliver on them. This is
right, will have disproportionately
positive effects on performance? a key part of assessing the viability of any new venture.
The Power of Connections
1 Uncertainty in Opportunities
Despite insights from various analyses, there will always be
considerable uncertainty about how attractive a particular
opportunity really is. Will customers buy? Will trends change?
Will new competitors emerge?

2 The Connected Advantage

Those with strong connections - up, down, and across the
value chain - will be the first to see shifts in the winds of
change. They'll be best positioned to adapt their strategy
before others even realize the landscape has changed.

3 The Power of Networks

Having a well-connected team enhances the attractiveness of an
opportunity, as the team is more likely to be able to navigate the
inevitable uncertainties and changes in the market.
Aligning Opportunity and Aspirations
Mission and Aspirations Critical Success Factors
Every company and entrepreneur has a Identifying an industry's critical success
clear mission and set of aspirations. factors is crucial. The opportunity must
These shape the types of opportunities be one where the team can deliver on
they will consider pursuing, as the these key factors, or it will not be deemed
opportunity must align with their goals attractive, no matter the market potential.
and risk tolerance.

Connections and Insights Holistic Assessment

Strong connections up, down, and across Assessing an opportunity requires
the value chain provide invaluable considering all these elements - mission,
insights that can help navigate the CSFs, and connections - to determine if it
inevitable uncertainties and changes in is truly a good fit for the individual or
any market opportunity. company.
Pursuing the Right Opportunities

Aligned Critical Success Valuable Holistic

Aspirations Factors Connections Assessment
Strong connections Carefully evaluating
The opportunity The team must
provide crucial all these elements
must fit the have the
insights to navigate is essential for
company or competencies to
uncertainty and identifying the right
entrepreneur's excel at the
change. opportunities.
mission, goals, and industry's key
risk tolerance. success factors.
 Navigating Uncertainty

Changing Trends Competitive Customer Needs Navigating

Landscape Change
Macro trends can shift in New competitors Customer needs and Strong connections
unexpected ways, for can emerge, or the preferences can and the ability to
better or worse, structural evolve, requiring the quickly respond to
impacting the viability of characteristics of business to adapt to shifts are key to
an opportunity. the industry may stay relevant. navigating the
change, altering the inevitable
opportunity. uncertainties.
Putting the Seven Domains to
Work
When pursuing business opportunities, it's crucial to carefully
evaluate them across multiple domains to ensure long-term
success. This section explores the importance of selecting the
right opportunities, the interplay between the seven domains,
and the need to anticipate and respond to environmental
changes. By taking a comprehensive approach, companies can
position themselves for sustainable growth and competitive
advantage.
 Adapting to Environmental Change

Identify Trends Evaluate Impact Formulate Strategy

Proactively identifying key Assessing the potential Based on the impact

trends and changes in the impact of these analysis, the firm can then
macroenvironment is the first environmental changes on formulate a strategic
step in adapting to a shifting the firm's profitability and response, whether it be
landscape. market position is crucial for proactive or reactive, to
developing an appropriate capitalize on opportunities
response. or mitigate threats.
Responding to Environmental Change
1 Proactive Changes

Identify and address key trends before competitors.

2 Reactive Changes

Develop systems to respond to environmental events.

Opportunity/Threat Matrix
3
Assess probability and impact of potential events.
Opportunity/Threat Matrix

1 Probability Assessment

Management must determine the probability of occurrence for each

identified environmental event that could impact the firm, both positively
and negatively.

Impact Evaluation
2
The degree of impact, in terms of profitability and/or market share, of each
event must also be assessed to prioritize the most critical issues.

3 Response Strategy
Based on the probability and impact analysis, the firm can
develop appropriate response strategies to either
capitalize on opportunities or mitigate threats.
Opportunity/Threat Matrix Example
High Probability, High Impact Low Probability, High Impact
Events with a low probability of occurrence but
Events that are likely to occur and have a
potentially high impact, like the redundancy of
significant impact on the business, such as the
fiber and copper wire networks due to wireless
rise of Voice-over-Internet Protocol (VoIP) in
communications technology, should be re-
the telecommunications industry, require close
evaluated periodically to ensure the impact
monitoring and strategic planning.
assessment remains accurate.

High Probability, Low Impact Low Probability, Low Impact

Events with a high probability of occurring but a Events with a low probability of
relatively low impact, such as the shift of TV occurrence and a low impact, like the
viewing from televisions to personal affordable storage and accessing of vast
computers, may not require immediate quantities of data, can be safely ignored
attention and can be dropped from the firm's or monitored with less frequency.
radar for the time being.
Swimming Upstream
Upstream marketing focuses on understanding customer needs, conducting market research, and
developing products or services that meet those needs. It's all about laying the groundwork before
launching a marketing campaign.

Swimming Downward
Downstream marketing involves the actual promotion and distribution of products or services to the
target audience. It's about reaching out to customers, creating awareness, and generating sales.

Example
Let’s say a company wants to launch a new line of children’s toys. Before they start
designing and producing the toys, they conduct surveys and interviews with parents to
understand what features and themes would be most appealing to their target audience.
Based on the feedback they receive, they decide to create a line of educational toys that
promote creativity and problem-solving skills. This way, they’re able to develop products
that resonate with their customers’ needs and preferences.
Assessing Market Attractiveness: Key
Takeaways
•Informed Decisions: You can decide whether to enter a market or not, and if so, how to best
position yourself for success.
•Opportunity & Threat Identification: Uncover potential gaps in the market (opportunities) and
potential challenges from competitors or regulations (threats).
•Strategic Foundation: Insights on market size, customer needs, profitability, and industry trends
inform product development, marketing strategies, and overall business direction.

End Notes
Analyzing market attractiveness is crucial for business success. It helps you determine if a market
offers enough potential for profit and growth.
Remember to consider both macro (big picture) and micro (specific segment) factors for a well-
rounded understanding of the market's potential.