1. Market Opportunity & Analysis Part 2 CPS 181s Jan 21, 2003

2. Future Case Studies  500 words initial post and each response  Raise questions, point out contradictions  What was fascinating, what did you struggle to understand?  Extrapolate future areas of inquiry  Focus on ideas, depth and critical analysis  Use other resources for research

3. GradingGrading  Each Case Study (9) - 40 points  Case Discussion Leader - 50 points  In-Class Assignments - 80 points  Class Participation - 50 points  Midterm Project Progress Report - 100 points  Final Project Presentation - 400 points Total = 1040 points

4. Tools & Techniques to Determine Where Will Business Compete?  Customer needs?  Financial opportunity?  Competitors?  Company resources or partners to fulfill needs?

5. Framework for Diagnosing Market Opportunity What is the Playing Field for the Business? Identify Unmet and Underserved Needs Identify Target Customer Segments Company’s Capabilities that Bring Opportunity or Advantage Assess Competitive, Technical and Financial Opportunity Attractiveness Make Go / No Go Assessment 5 Conditions To Satisfy

6. Does Segmentation Matter?  Can you give an example of a company that segments the market?  Do you feel segmentation increases profits?  Does it make any difference in the on-line world?  Does it provide any value to the customer?  Does segmentation facilitate customization or personalization?

7. Honda vs Barneys

8. Which is Better? Analysis vs No Analysis  Real goal is to reach critical mass with key customer segment in as short a time as practical  No-analysis blind alleys, partner negotiations, and customer complaints bog a company down if they don’t sort out a clear opportunity path from the start  Second and third movers capitalize on the mistakes of other to get more customers for less cost  No-analysis may feel like moving fast without assessment, but actually generating more heat than light  Speed not precision (=lost time)  Network economics capitalize on first-mover momentum  Rapidly connect and lock in large numbers of customers  Large customer base provides lower costs  Old rules no longer apply, a company is better off learning by doing

9. Trapped Value vs New Value  Create more efficient markets  Create more efficient delivery (value) system  Enable ease of access  Disrupt current pricing power (consumer power)  Customize offerings  Radically extend reach and access  Build community  Enable collaboration- across people, location, time  New functionality or experience

10. The Consumer Decision Process

11. Model of On-line Consumer Behavior

12. ToolsTools  Segment Prioritization Chart?

13. Segment Prioritization Chart Personal Business Groups Low – Middle Income / Not Frequent Fliers Middle – Upper Income / Frequent Fliers Students Retirees Trip Purpose Flexibility Who Retirees Business Trips Students on Vacation Group Trips All Other Trips Low / Mid Income Families on Vacation Students Going Home Other Low / Mid Income on Vacation High Income Families on Vacation Low / Mid Income on Getaways Last Minute Demographics and Behavior Occasion = Primary Focus = Approximately 45%–55% of the Total Market Total Number of Trips = 45%– 55% of the Market High Income Non-Family Trips

14. ToolsTools  Segment Prioritization Chart  Analyze which customer segments to pursue

15. ToolsTools  Segment Prioritization Chart  Competitor Maps (egg diagram)

16. Competitor Profiling — Eastman Kodak Eastman Kodak Purchase Camera Purchase Film Take Pictures Digitally Manipulate Pictures Print and Receive Pictures Share Pictures Store Pictures on CD Purchase Accessories Download and Choose Pictures to Print HP Olympus Snapfish Moto Photo Geocities Seattle Filmworks District Ofoto HP Adobe Systems Fuji cameraworks.com Snapfish Shutterfly Direct Competition Indirect Competition

17. ToolsTools  Segment Prioritization Chart  Competitor Maps (egg diagram)  Underserved areas  competitor strengths  potential collaborators

18. ToolsTools  Segment Prioritization Chart  Competitor Maps (egg diagram)  Competitor Mapping to Selected Customer Segments

19. Competitor Mapping to Selected Segments for Priceline High performance levelMedium performance levelLow performance level

20. ToolsTools  Segment Prioritization Chart  Competitor Maps (egg diagram)  Competitor Mapping to Selected Customer Segments  Unconstrained opportunities  segment interactions  growth potential

21. ToolsTools  Segment Prioritization Chart  Competitor Maps (egg diagram)  Competitor Mapping to Selected Customer Segments  Opportunity Assessment Chart

22. Priceline.com Overall Opportunity Assessment

23. ToolsTools  Segment Prioritization Chart  Competitor Maps (egg diagram)  Competitor Mapping to Selected Customer Segments  Opportunity Assessment Chart  Overall effect considering all factors  Managers assess magnitude of company’s impact

24. Go/No-Go Assessment (Opportunity Story) =Rough Draft of Business Plan  Describe target segment within selected value system  Articulate high-level value system  Spell out customer benefits  Identify critical capabilities and resources needed to deliver customer benefit  Categorize critical capabilities as in-house, build, buy, or collaborate  Describe how company will monetize the opportunity (i.e., how it will capture some portion of the value that it creates for its customers)  Provide an initial sense of the magnitude of the financial opportunity

25. Schwab.com Launched January 15, 1998

26. Schwab: Unmet and Underserved Needs (1997 Timeframe) Plan Savings Goal Determine Optimal Asset Allocation Receive Ideas and Recommendations Place Order Sell Stock Research Stocks Track Portfolio Performance Receive Dividends Unmet and Underserved Needs Planning tools to simplify goal setting Tax Reporting Aggregation of investment information Place order and track status anytime, anywhere Access real time account information Place order and track status anytime, anywhere Download to tax software Education on investing Process Steps

27. Schwab — Opportunity Attractiveness vs. Resource Availability High LowHigh Low Opportunity Attractiveness Resource Availability Note: Opportunity attractiveness based on competition level and opportunity financials Full Management Low Price Quality Advice Customer Service Quality Information

28. Schwab Resource Availability Company Capabilities Partner Capabilities Overall Segments Capability highly addressing segment need Capability moderately addressing segment need Capability not addressing segment need

29. Effectiveness of Different Segmentation Methods = Low= High Segmentation Methods Segmentation Criteria

30. Needs Based Segmentation: Charles Schwab Source: Jeffrey Veen, Hot Wired Style, Monitor Analysis “Saving For a Goal” Saving for retirement Saving for college Saving for house down payment Saving for retirement Saving for college Saving for house down payment “Traders” Hobby investors Active traders Hobby investors Active traders “Financial Planning” Estate planners Tax planners Trust fund managers Estate planners Tax planners Trust fund managers Schwab’s market segments fall into three categories

31. Schwab Segmentation (1997 Timeframe) Buy and Hold Current Offline Schwab Customer High Net Worth (<$1M) Married Not Schwab Customer Other White Collar Frequent Trades Single Blue Collar Retiree University Student Children > 30 No Children < 30 Mature ( > 55) High Priority Secondary Priority Tertiary PriorityDe-emphasize

32. High performance levelMedium performance levelLow performance level Schwab — Competitor Map to Segments

33. Schwab.com Overall Opportunity Assessment

34. Case Study – Virtual Vineyards  What are the market conditions that allow VV to provide value to suppliers? To end-users. What end-users does VV target?  What is the business model of VV?  How has VV established its acknowledged dominance of virtual retailers in this category? What are the resources that VV has used to develop this dominance?  What are the attributes of a high quality retail service when it is delivered screen-to-screen rather than face-to-face?  What additional actions might VV take to enhance their position in the marketplace?  What are the major problems confronting online firms when they attempt to craft a unique, sustainable business model?