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

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 ( 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  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 cost- effective reach  any distance learning site

Exhibit 2–2: Three Types of Basic Value More efficient markets More efficient value systems Customize offerings Build community Introduce new functionality or experience Disrupt pricing Ease access Radically extend reach Trapped Value New-to-the-World Value Hybrid Value