Market Sizing and Competition Analyses
You may not be all that unique. Understand the primary need and business is crucial and fundamental. Competition can be identified once you identify the need that you are addressing. And competition may be visible or invisible. Invisible competition is more dangerous because we don’t know who and where they are. Remember, you may get the feeling of uniqueness perhaps because other competitors have done the research and did not find your space/offering to be profitable. Put some rigor in your understanding of the business.
Note: One stop shop doesn’t bring the same premium in India. Companies are making more through specialization. So focus on the advantage/specialization.
Don’t get caught in your own trap. “We want one so everyone wants one”. At early stage, you extrapolate from your experience, but that should only be an added factor for starting business. Disassociate yourself from the idea, so you can start looking at it objectively.
What’s the Market? What’s my total addressable market? Do the research before you meet the potential market. Are they willing to experiment, can they take decisions here, have they worked with smaller players, do they have budgets for your segment – use these filters to figure out who to go after at the beginning. These filters are really your business insight. Remember, buying behaviors of clients do not change just because you are starting up.
Make sure you validate data by asking commonsense questions. Check for counter sources and filters that prune the final numbers. Be accurate rather than precise.
Customers are different from users. Customers pay. They are your market. There are influencers – key opinion leaders. There may be many other influences, and you have to take them into account.
Would it make a difference if you did not exist? That is an important question.
Why would they not care?
- Too many options that appear the same to customers
- Demand is lesser than supply
- Low entry barriers
- Partnership with jobbers – balance shifts away from you
- What is advertising doing for you?
How does brand matter in these conditions? Good businesses do hard labor to meet competition – to sustain their brand. Good businesses in these conditions become more efficient with the use of processes and technology.
There are many things that can be recommendations, but that will depend upon a host of factors.
“A business model describes the rationale of how an organization creates, delivers, and captures value”
Value Creation – building blocks
- Value conception – who conceptualizes and who controls
- Collaborative (partnership/JV, crowdsourcing, co-creation)
- Value composition – who composes the value
- Form – product, service, hybrid
- Product vs service is getting blurred – but usually time to market, infrastructure requirements and growth curve; also timeframes for getting the revenue
- Challenge is to collapse the time to market
- Value production – who produces, who controls production assets?
- Pay for service (BOOT etc.)
- Value targeting
- Forecast demand – push model (car company)
- React to demand – pull model (Dell, BTO supply chain)
- Activate latent demand or create new demand (space tourism?)
- Value pricing
- Amount, time, currency, payer, ownership
- Traditional buy
- Fractional Ownership
- Free for the user
- Value delivery
- Physical, virtual, hybrid
- Aggregation (info vs. look and feel vs. delivery vs. service)
Business Model Innovations – Blue Oceans – unexplored markets, unlocks hidden value, not easy to copy.
What will lead to consumers demanding/consuming more (Microfinance, JustBooks)? What will lead to customers’ latent demand getting activated? What will unleash totally new value for the customer? How can I capture more value?
What will differentiate your company from the rest? What is a defensible competitive position (what will tie in the customer? Example, Mahindra knows exactly the demand). What will enhance your influence and control in the ecosystem?
How linear is the relationship between resources and revenues (you should be looking at non-linear relationships)? What competencies will you need? For established companies, to what extent will systems and processes need to change? To what extent are you dependent on third parties?