How to Use a Market Opportunity to Build Out Your Innovation Strategy
As businesses continue to navigate through the uncertainties of the changing world, opportunities to develop products or services that address the new needs of customers continue to appear. Identifying and leveraging market opportunities is critical for building a strong innovation strategy and remaining competitive. Market opportunities present a window for growth and can enable companies to reach untapped markets and create new products and services that can capture a larger market share. Effective utilization of market opportunities can help businesses stay ahead of their competitors, create sustainable competitive advantages, and achieve their strategic goals.
How can I identify a new market opportunity for my business?
Identifying market gaps and translating them into new opportunities requires constant scanning of the market landscape, staying ahead of emerging trends, and being adaptable to changes in customer demands. The ability to identify these opportunities and act on them is what sets successful companies apart from their less successful counterparts. And sometimes, knowing where to look can help you be more agile.
What Is a Market Opportunity?
Imagine this: after spending years perfecting your product or service, pouring your heart and soul into making it the best it can be you’re ready to share it with the world. Before you take the plunge, there’s one question you need to answer: is there a market for what you’re offering?
Market opportunity is not just the potential size of your market, but also the projected sales you can make. Knowing how many consumers or businesses belong to your target market, and how much revenue you can generate from them is the first step to identifying a market opportunity.
Maybe this sounds like a daunting task, and that’s because it does require research and analysis. The best place to start is by identifying your target audience and gathering data on their needs, behaviors, and preferences. Take a look at competitors and analyze strengths, weaknesses, and market share, then combine this information, to gain a clearer picture of your potential customer base and how to best serve them.
A solid understanding of your market opportunity is crucial for building a sustainable and successful business. Don’t be afraid to do your homework and get creative research methods - the more you know, the better off you’ll be.
Capitalizing on a Market Opportunity
A wise person once said, “The best way to predict the future is to create it.” But how can you make it happen without knowing which market to pursue? Identifying a profitable market opportunity is the backbone of a successful innovation plan.
Who Is Your Target Customer?
To start, you must determine the size of your potential customer base. Keep in mind that pleasing everyone isn’t better - in fact, it can be detrimental to success. Focusing on a niche market, actually helps you find better-quality customers.
To determine the size, start by considering how many people could benefit from your product or service. An essential part of this step is figuring out the profitability of the market. Are your potential customers willing and able to invest in what you have to offer? Analyzing consumer trends and purchasing behaviors will help you to better understand this. Demographic data can help you understand the people interested in what you’re offering.
Take Demand Into Consideration
A good example of a market opportunity is the rise in demand for sustainable products. Patagonia capitalized on this by developing environmentally friendly and socially responsible products. A survey of more than 1,000 US adults revealed evidence that 66% would pay more for sustainable products, indicating a clear market opportunity for businesses willing to take the leap. Patagonia’s example shows that after taking the demand for sustainability into consideration, the company was able to innovate not only the products but also restructure multiple operations. As a result, Patagonia now leads the way in sustainability within the apparel industry.
Assessing Potential Growth
Whether launching a new product, expanding into a new market, or looking to remain competitive, understanding the trajectory of the market is crucial to success. Examining signs and studies help determine if the market is expanding, remaining static, or declining. A growing market will likely create more opportunities for your business, while a shrinking market will require a shift in strategy to remain profitable.
Companies that focus on growth have higher valuations and generate more shareholder value than those that do not. According to research conducted by McKinsey, businesses that expand into adjacencies with high similarity to their core business and leverage their unique competitive advantages are more likely to achieve profitable growth and outperform their peers. They also determined that out of the 10 growth rules, companies that adopt a programmatic approach to mergers and acquisitions (M&A) are more likely to deliver peer-beating returns and unlock key growth pathways.
Current volatile financial markets disrupting the financial industry are a good example of how current events can open the door to market opportunities and innovation. Fintech is an indispensable tool for financial institutions, enabling them to improve access to financial services and facilitate more efficient transactions. Due to the current regulation and compliance issues causing economic downturns, there is a new opportunity for emerging technologies to push the fintech industry to the forefront of supporting economic recovery, with banks and financial institutions playing a pivotal role in this process.
In the midst of economic uncertainty, the ability to adapt and disrupt can make or break a company’s success. Take Trulioo for example, a KYB and KYC API that provides electronic identity and address verification. In the digital age, identity verification is a fundamental building block of our economy. This is especially true for financial services companies, who are bound by strict regulations to verify the identities of both individuals and businesses. These regulations prescribe a set of techniques that must be followed in order to maintain compliance and operate under their license. As the emergence and global adoption of fintech disrupted the financial sector, it also created a market opportunity for financial institutions, businesses, and emerging technologies to need new ways of verifying a user’s identity. The company saw this need and innovated to provide technology to fill this gap. Now, through a single API integration, Trulioo offers real-time verification services for an impressive 5 billion consumers and 330 million business entities across the globe. This comprehensive and efficient solution has made Trulioo a leading provider of verification services in the digital age.
Define Your Value Proposition
Once you have identified a market opportunity, the next step is to define your value proposition. This statement must clearly outline how your innovation can solve problems and fill the gaps in the market. A great example of this is Tesla, who identified a market opportunity for electric cars that are both sustainable and high-performing. Their value proposition is simple: “Tesla’s mission is to accelerate the world’s transition to sustainable energy.” By clearly communicating its value proposition, Tesla was able to build a loyal customer base and create a strong brand image.
Develop Your Innovation Strategy
After figuring out your market opportunity, learning about the needs and desires of your target customer in order to understand demand, and creating a growth strategy - it’s time to develop your innovation strategy. This should include a plan for how you will build, test, and launch your innovation including an outline of your goals, target market, and timeline.
Develop a robust business plan that includes an analysis of the market opportunity, a competitive analysis, a marketing plan, and a financial plan. Ensure that your plan outlines how your product or service fills a gap in the market and how it will be profitable.
- Market opportunities present a window for growth and can enable companies to reach untapped markets and create new products and services that can capture a larger market share.
- A wise person once said, “The best way to predict the future is to create it.” But how can you make it happen without knowing which market to pursue? Identifying a profitable market opportunity is the backbone of a successful innovation plan.
- A solid understanding of your market opportunity is crucial for building a sustainable and successful business. Don’t be afraid to do your homework and get creative research methods - the more you know, the better off you’ll be.
- Demographic data can help you understand the people interested in what you’re offering.
- Once you have identified a market opportunity, the next step is to define your value proposition. This statement must clearly outline how your innovation can solve problems and fill the gaps in the market.
- After figuring out your market opportunity, learning about the needs and desires of your target customer in order to understand demand, and creating a growth strategy - it’s time to develop your innovation strategy.
Leverage a Market Opportunity to Innovate
Innovation is the key to staying ahead of the curve and overcoming obstacles in the ever-evolving business world. To stay ahead of the competition and tackle challenges with agility, we can help you identify market opportunities and work with you to develop the right strategies to innovate. At Go Studio, our team of specialized experts is committed to discovering emerging technologies and creating new solutions that can give your business the competitive edge it needs. Access industry-specific resources that help all types of businesses, from startups to large corporations. If you want to take your business to the next level, partner with Go Studio and unlock your full potential. Contact us today to learn more about our services and start your journey toward innovation. Ready to get started? Request an introduction.