Chapter #3: Market Potential, Market Demand and Market Share

Question 1

What is a major cause of missed market opportunities and the greatest threat to business survival?

Answer 1

A narrow focus on existing product markets

Question 2

Why do we estimate a market space and market potential?

Answer 2

• View demand beyond existing
• Recognise emerging MKT opportunities
• Identify gaps
• Identify similar markets

Question 3

What is the definition of a “narrow market”?

Answer 3

A market adopted by design - smashing a niche (not always a limitation but a better assessment)

Question 4

Why is it important to assess market demand?

Answer 4

To understand the number of units that can be consumed and identify the saturation point (once reaching saturation, new customers become hard to find)

Question 5

What are the 3 types of innovation?

Answer 5

Continuous
Disruptive
Discontinuous

Question 6

What is continuous innovation?

Answer 6

The development of technology and improved products for a given market

Question 7

What s disruptive innovation?

Answer 7

Change along the technology innovation curve that allows for the development of new products that are less expensive, smaller or easier to use

Question 8

What is discontinuous innovation?

Answer 8

A major shift from an old technology to a new technology that usually offers new customer benefits

Question 9

Once new technology reaches a tipping point, it develops more rapidly through ___________.

Answer 9

Continuous innovation

Question 10

Which markets tend to be well below their market demand potential?

Answer 10

New and global markets (mass scale, many customers to attempt to saturate)

Question 11

What are the 7 major forces that restrict a product from realising its market potential?

Answer 11

• Unaffordable
• Unrecognised need
• Lack of awareness
• Lacks desired performance
• Customers lack skills to use
• Insufficient infrastructure
• Unavailability

Question 12

What 3 forces affect the rate of market growth?

Answer 12

Market potential
Market penetration
Rate of entry

Question 13

What are some other forces affect market growth rate ?

Answer 13

Customer (need, risk, buying, observation, trial)

Product (advantages, affordability, ease of use, performance, availability)

Question 14

Products/services with weak overall scores for customer forces and product forces experience ____________.

Answer 14

Very slow market growth

Question 15

When customer forces and product forces are strong overall ___________.

Answer 15

Steady market growth can be achieved.

Question 16

What does NMC stand for?

Answer 16

Net Marketing Contribution

Question 17

An average decline in the average selling price of a product typically results in _________________

Answer 17

Demand growth

Question 18

Why do we estimate market potential?

Answer 18

To understand where the ceiling lies so that businesses do not project growth beyond what is possible

Question 19

What does the “Market Share Performance Tree” show us?

Answer 19

It indicates how the customer response to a strategy influences market share

Question 20

What does MSI stand for?

Answer 20

Market Share Index

Question 21

What does Market Share Index (MSI) tell us?

Answer 21

• Causes of lost mkt share
• Identify mkt share change for improvements
• Reasonably estimate profit potential

Question 22

What does SDI stand for?

Answer 22

Share Development Index?

Question 23

Why do we look at MDI and SDI together?

Answer 23

Tells the potential for future sales growth and specifically, whether a business should focus on market development, share development or both (depending on the growth opportunity portfolio)