Whether you’re brand new to business or have been in the game for a while, it’s a good idea to always look for new opportunities. That’s why we’re about to look at how to identify a market opportunity so you can get your big break — or maintain your momentum.
What Is A Market Opportunity?
Have you ever used something and wondered why it’s not better? Have you then mentioned it to your friends and discovered that they had the exact same thought?
Congratulations, you’ve just had a business idea — and maybe found a market opportunity.
It’s a product or service that hasn’t been invented or already exists but could be improved. There’s also a demand for it, which means you have potential customers.
Why It’s Important to Look for Market Opportunities
If you want to start a business but aren’t sure what to sell, then it’s important to find a market opportunity. Otherwise, you don’t have anything you can use to build a business.
But it’s also important for existing businesses to look for market opportunities.
Even if you’ve found a comfortable niche and everything runs smoothly, it’s always possible for your situation to change. Because a competitor could come along and steal your thunder.
How to Identify Market Opportunity in 13 Steps
There are many ways to skin a cat and equally many ways to identify a market opportunity. But like all good artists, you shouldn’t wait for inspiration to fall from the sky. So here are thirteen steps you can follow to identify a market opportunity.
1. Choose a Market
You need to settle on a market before you can find any opportunities. What industry do you want to start a business in? Do you want to sell ice cream or SaaS solutions? Ballet lessons or disposable lighter repair? Start with the big picture and then narrow down your research.
How to do it: Read this guide on how to choose a market for your startup to get started.
2. Look at the Market Size
Once you know which market you want to enter, it’s time to look at the size. How many people use the product or service? And how many other businesses are selling it? There’s a huge market for ice cream but probably not a very big market for disposable lighter repair services.
How to do it: Read our guide on how to calculate the total addressable market for your startup.
3. Trace the Market Growth
Some markets are growing while other markets are dwindling. Join a growing market and you could make a fortune. But enter a dying market and you could lose everything. That said, you could identify a market opportunity in a dwindling market and be the one to turn it all around.
How to do it: Look at these seven types of market growth and see if they apply to your industry.
4. Identify Market Trends
Markets don’t just grow and shrink. They also change shape with the emergence and disappearance of trends. Read relevant publications and follow industry influencers to stay on top of the latest news. You could be one of the first businesses to capitalize on the latest trend.
How to do it: Here are five different ways to keep up to date with the latest market trends.
5. Identify Your Target Audience
You know which market to enter, how big it is, and what’s going on. Now it’s time to look at the most important aspect of any business: the customers. Who are they? Why do they use the product or service? How can you reach them? And how can you win them over as customers?
How to do it: Use our guide on how to identify your target audience to create an overview.
6. Segment Your Target Audience
There may be more than one person who uses the product or service you offer. For example, the audience for ice cream is quite diverse. Everyone from kids to pensioners eats it. But while seniors may be content with the classic flavors, maybe the kids are looking for something new.
How to do it: Here’s a step-by-step guide on how to segment your target audience.
7. Analyze the Purchase Situation
The purchase situation is what determined how and when a customer is ready to buy. Some of your ice cream customers may have disposable income (the pensioners) while others may not have it yet (the kids) but will in the future. Analyze the purchase situation of each segment.
How to do it: Check out these examples of purchase situations you should account for.
8. Analyze Your Direct Competition
You know who your potential customers are and whether or not they’re in a position to buy. But what about your competition? Who are they and what do they offer? Is there something you offer that they don’t? Could you offer the same but better or cheaper? Analyze your competition.
How to do it: Use this step-by-step guide on how to conduct a competitor analysis.
9. Analyze Your Indirect Competition
Indirect competitors are businesses that don’t necessarily offer the same product or service as you do. But they appeal to the same audience, which means you’re competing for attention if not money. Look at what they’re doing to identify an opportunity to expand your own appeal.
How to do it: Conduct a similar analysis as with direct competitors but focus on the marketing.
10. Find Complementary Goods
Another form of indirect competitors are businesses that sell products or services that can be used with yours. If you’re selling ice cream, then look at companies that sell ice cream cones or sprinkles. See if you can partner up or simply expand your product range to include their offers.
How to do it: Check this list of examples of complementary goods and then make your own.
11. Look at Other Industries
Ever noticed how some companies move into other industries? EasyJet is a great example. Their parent company took their winning formula from their travel business and applied it to hotels, cars, gyms, energy, coffee, and much more. See if you can break into other industries.
How to do it: Here’s a good guide on how to break into a new industry without starting over.
12. Look to Foreign Markets
Maybe you don’t want to change industries. But why not export your product or service to another country or continent? If you have success at home, maybe you can replicate it abroad. Conversely, maybe you can get a break overseas even if you can’t make it locally.
How to do it: Ask yourself these ten questions when you consider taking your business abroad.
13. Analyze Your Environment
So many different factors can influence market opportunities. Scientists could make a breakthrough in artificial intelligence. Politicians could pass new business regulations. Natural disasters could happen. Look around you and think outside the box to identify opportunities.
How to do it: Look at these examples of environmental analyses for inspiration to do your own.
Take Advantage of Your Market Opportunity
You should now have a good idea of how to identify a market opportunity so you can either start or continue to grow your business. You can sign up for IdeaBuddy for free and use our tools to generate ideas, develop and test them, and create a business plan from scratch.
Happy opportunity hunting!