Chapter #3: Market Potential, Market Demand and Market Share Flashcards
What is a major cause of missed market opportunities and the greatest threat to business survival?
A narrow focus on existing product markets
Why do we estimate a market space and market potential?
- View demand beyond existing
- Recognise emerging MKT opportunities
- Identify gaps
- Identify similar markets
What is the definition of a “narrow market”?
A market adopted by design - smashing a niche (not always a limitation but a better assessment)
Why is it important to assess market demand?
To understand the number of units that can be consumed and identify the saturation point (once reaching saturation, new customers become hard to find)
What are the 3 types of innovation?
Continuous
Disruptive
Discontinuous
What is continuous innovation?
The development of technology and improved products for a given market
What s disruptive innovation?
Change along the technology innovation curve that allows for the development of new products that are less expensive, smaller or easier to use
What is discontinuous innovation?
A major shift from an old technology to a new technology that usually offers new customer benefits
Once new technology reaches a tipping point, it develops more rapidly through ___________.
Continuous innovation
Which markets tend to be well below their market demand potential?
New and global markets (mass scale, many customers to attempt to saturate)
What are the 7 major forces that restrict a product from realising its market potential?
- Unaffordable
- Unrecognised need
- Lack of awareness
- Lacks desired performance
- Customers lack skills to use
- Insufficient infrastructure
- Unavailability
What 3 forces affect the rate of market growth?
Market potential
Market penetration
Rate of entry
What are some other forces affect market growth rate ?
Customer (need, risk, buying, observation, trial)
Product (advantages, affordability, ease of use, performance, availability)
Products/services with weak overall scores for customer forces and product forces experience ____________.
Very slow market growth
When customer forces and product forces are strong overall ___________.
Steady market growth can be achieved.
What does NMC stand for?
Net Marketing Contribution
An average decline in the average selling price of a product typically results in _________________
Demand growth
Why do we estimate market potential?
To understand where the ceiling lies so that businesses do not project growth beyond what is possible
What does the “Market Share Performance Tree” show us?
It indicates how the customer response to a strategy influences market share
What does MSI stand for?
Market Share Index
What does Market Share Index (MSI) tell us?
- Causes of lost mkt share
- Identify mkt share change for improvements
- Reasonably estimate profit potential
What does SDI stand for?
Share Development Index?
Why do we look at MDI and SDI together?
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)
