30.1 Market Attractiveness
Begin by asking whether the market is attractive enough to justify further consideration.
Important factors include:
- Size: Is the market large enough to matter?
- Growth: Is demand expanding, stable, or declining?
- Profitability: Are industry margins attractive?
- Structure: Is the market fragmented or dominated by a few players?
- Barriers: Are there regulatory, technological, capital, or distribution barriers?
Key principle: A large market is not automatically attractive. Strong competition, low margins, or high barriers can make a large opportunity unattractive.
30.2 Customer Needs
Next, determine whether customers actually need the product or service and whether the proposed offering solves a meaningful problem.
Consider:
- Target customers: Who is most likely to buy?
- Needs: What problem are they trying to solve?
- Purchase criteria: How important are price, quality, convenience, features, brand, or service?
- Willingness to pay: How much value does the offering create?
Practical question: Why would a customer choose this product instead of existing alternatives?
For new-product cases, weak customer needs are often more important than impressive product features.
30.3 Competitive Position
A good market can still be difficult to enter if competitors are strong.
Evaluate:
- Competitors: Who are the major players?
- Market shares: How concentrated is the market?
- Differentiation: What advantages do competitors have?
- Likely response: How might incumbents react to entry?
Key question: What reason does the client have to believe it can win?
Possible advantages include lower costs, better technology, stronger distribution, brand reputation, customer relationships, or a differentiated product.
30.4 Capabilities
Even an attractive opportunity may fail if the client lacks the capabilities required to execute it.
Relevant capabilities may include:
- Product development: Can the offering be built successfully?
- Manufacturing: Can the company produce at required quality and scale?
- Sales and distribution: Can it reach the target customer?
- Technology: Are necessary systems and expertise available?
- Management: Can the organization support expansion?
Assessment: Identify which capabilities already exist, which can be built, and which may require partnerships or acquisitions.
30.5 Economics
Market attractiveness and customer demand are not enough. The opportunity must also generate acceptable financial returns.
Estimate:
- Revenue: Potential customers × expected share × price or spending.
- Operating costs: Production, sales, marketing, distribution, service, and overhead.
- Investment: Product development, facilities, technology, launch spending, or acquisitions.
- Profitability: Expected margins and profit.
- Returns: ROI, payback, or other client-specific hurdle rates.
Important: Test realistic market share rather than assuming the client captures a large portion of the market immediately.
30.6 Entry Modes
If the opportunity is attractive, determine how the client should enter.
Common options include:
- Build organically: Develop the offering and capabilities internally.
- Acquire: Purchase an existing player.
- Partner: Work with a local company, distributor, technology provider, or other partner.
- Joint venture: Share ownership and risk with another organization.
- License or franchise: Use another company’s capabilities while limiting direct investment.
Trade-off: Compare speed, investment, control, capability access, and risk.
There is no universally best entry mode. The right choice depends on the client’s starting position and the market’s requirements.
30.7 Risks
Identify the risks most likely to undermine the business case.
These may include:
- Demand risk: Customers may adopt more slowly than expected.
- Competitive risk: Incumbents may cut prices or increase investment.
- Execution risk: The client may struggle to launch or scale.
- Regulatory risk: Approvals or rules may restrict entry.
- Financial risk: Costs may exceed expectations or returns may take longer to materialize.
Good analysis: Focus on the few risks that could materially change the decision and identify how they could be mitigated or tested.
30.8 Go/No-Go Decisions
The final recommendation should integrate the entire analysis rather than rely on one attractive feature.
A strong go decision usually requires evidence that:
- The market is sufficiently attractive.
- Customers have a meaningful need.
- The client can establish a competitive position.
- Required capabilities are available or obtainable.
- Expected economics meet the client’s objectives.
- Major risks are manageable.
If one critical condition is not met, a conditional recommendation may be appropriate.
Example: “I would recommend entering only if the client can secure a distribution partner, because customer demand and economics are attractive but current channel access is insufficient.”
Final principle: Market-entry and new-product cases are ultimately investment decisions. Do not ask only whether the opportunity is attractive. Ask whether this client can win, whether the economics justify the investment, and whether the risks are acceptable. The strongest recommendation brings those questions together into a clear, evidence-based decision.
