Unit 2:

Opportunity Identification and

Evaluation

- Janmejay Shukla
WHAT IS OPPORTUNITY?
• Opportunity is defined as a situation that enables an
entrepreneur to offer marketable products or services to
interested buyers or end users.

• The entrepreneur gets information regarding investment

opportunities from the Internet, Financial Institutions,
Government, Commercial Organizations, Friends and so
on.

• To choose best business opportunity from the information

collected requires ingenuity, skill and foresight on the part
of entrepreneur.
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 • To select feasible and rewarding opportunity, entrepreneur
has to evaluate following Idea and understand gap between
demand and supply.

1. Study Government rule and regulations regarding

different business opportunities.
2. Extensive study of promising investment opportunity.
3. SWOT Analysis.
4. Market Survey.
Identifying & Developing Entrepreneurial Potential

•When people decide they have certain needs and want to be

satisfied, or when people discovered a problem of some kind
that can be helped by a product or service.
•The presence of unfulfilled needs and want or problems
alerts the entrepreneur to the potential opportunity.
•The entrepreneur later creates a business that is able to
fulfill the needs or want and solve the problem.

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Identifying a Business Opportunity
► An Entrepreneur is said to be an opportunity seeker.
► For the potential entrepreneur his first task is to identify, explore and select an
attractive business opportunity.
► Opportunity can be defined as an attractive and excellent project idea which
an entrepreneur search for and accepts such idea as a basis for his investment
decision.
► A good business opportunity must be capable of being converted into feasible
projects.

Two Major characteristics of a business opportunity:

1. Good and wide market scope i.e. Gap between present or likely demand and
supply.
2. An attractive, acceptable and reliable return on investment.
Steps in Identification of Business Opportunity

► Preliminary Evaluation
► Selection of Product or Services
► Conduct a Market Survey
► Contactual Programmes to collect sufficient information about proposed venture
► Succeeding in the market
Preliminary Evaluation

► Is opportunity compatible with the promoter?

► Is opportunity compatible with the Government regulations and priorities?
► Whether Raw Materials are easily available?
► What is the size of potential market?
► Whether cost justifies the project?
► What is the risk inherent in the project?
Selection of Product or Services

► Potential demand of the product or service.

► Estimated volume of demand for the product
► Assess potential of existing competitor.
► Study the scope for future demand
► Infrastructural facilities- Power, transport, etc.
► Availability of Raw material and Labour.
► Government policies and legislation.
► Environmental factors.
► Locational advantage of the product.
Conduct a Market Survey

1. Raw Material Availability:

► Search for leading supplier.
► Study of price policy of various suppliers.
► Study local and outside source of raw materials.
► Thorough analysis of credit facilities.

2. Equipment Availability:
► Identify major manufacturer here and abroad.
► Comparative features of various manufacturers.
► Price structure of different brands.
► Repair maintenance and after sales service facilities
► Guarantees and warranties by suppliers.
► Technical skilled staff requirement.
Conduct a Market Survey
3. Marketing and Distribution:
► Selection of best channel of distribution
► Advertising and publicity programme for the product
► Product positioning
► Market features and practices- Credit facility, min order size, incentives
► Business terms, commission, stocks, warehouse facilities.

4. Consumer Behaviour:
► Motivate buyers to buy new product.
► Analyse the buyers purchasing power.
► Analysis of Consumption patterns.
► Understand the preference for durability, service, economy.
► Understand consumer characteristics of different region and devise appropriate
sales message accordingly.
Contactual Programmes to collect sufficient
information about proposed venture

► Entrepreneur often need information and guidance, particularly in the initial

stages, on product potential, raw materials, policies, facilities, procedures,
finance formalities, incentives etc. It can be collected through state
Government agencies.
► Contact with Central and State level agencies set can be helpful in collecting
sufficient information about proposed venture.
► Industrial Finance Corporate of India (IFCI) in collaboration with IDBI, ICICI,
state organisations and banks, have set up a network of state level technical
consultancy agencies.
► They offer a package of professional and consultancy services to stimulate
industrial growth.
► EDP are also designed to provide information and knowledge.
Succeeding in the market
► The secret formulae for an entrepreneurs success is to produce what
customers will buy.

Following are the important characteristics which help the entrepreneur to

succeed in the market:

► Study people and their needs before starting any project.

► Identify Unsatisfied needs.
► You have to be better than your competitors.
► Always look for newer and more effective way of reaching customer.
► Entrepreneurs always have clear vision, goals and objectives.
► Constant feedback.
► Commitment to innovation
Market Analysis and Customer
Discovery
Market analysis is crucial to validate the feasibility of an idea and understand
customer needs.
A. Market Research Techniques
► Primary Research: Surveys, interviews, focus groups, and prototype testing.
► Secondary Research: Industry reports, government databases, and
competitor analysis.

B. Customer Segmentation
► Entrepreneurs must divide potential customers into distinct groups based on
demographic, psychographic, behavioral, and geographic factors.
► Creating buyer personas helps in designing tailored marketing and product
development strategies.
Key Components of Market Analysis:
•Industry Overview: Understanding trends, growth rate, and key players in the
industry.

•Target Market Identification: Defining customer demographics, psychographics,

and behaviors.

•Market Size & Growth Potential: Estimating the total addressable market (TAM),
serviceable available market (SAM), and serviceable obtainable market (SOM).

•Competitor Analysis: Identifying direct and indirect competitors, analyzing their

strengths, weaknesses, and market positioning.

•Market Trends & Opportunities: Studying technological advancements, regulatory

factors, and consumer preferences.

•Pricing & Revenue Models: Understanding prevailing pricing strategies and

determining a viable business model.
Customer Discovery Process

Identify the Problem & Hypothesis

•Define the problem your startup aims to solve.

•Develop hypotheses about who your customers are, what pain points they have, and
how your solution helps.

Find and Engage with Potential Customers

•Conduct interviews, surveys, and observations to gather real insights.

•Focus on early adopters—people who face the problem most acutely and are willing
to try new solutions.

Validate or Refine Assumptions

•Test your hypotheses with real customer feedback.

•Identify gaps between what you assumed and what customers actually experience.
Customer Discovery Process

Analyze & Pivot if Needed

•If feedback contradicts your assumptions, modify your business idea accordingly.
•Pivoting may involve changing the target market, product features, pricing, or
business model.

Develop a Minimum Viable Product (MVP)

•Based on customer feedback, build a basic version of your product to test with early
adopters.
•Continue refining the offering through iterative feedback loops.
Value Proposition and Competitive
Advantage
► A value proposition is a clear statement that explains how a product or
service solves a customer's problem, delivers specific benefits, and
differentiates from competitors. It is a key element of a business model and is
crucial for attracting customers.
Core Elements of a Value Proposition

•Customer Segment
•Who is your ideal customer?
•What are their key problems, needs, and desires?

•Customer Problem (Pain Points)

•What challenges or frustrations do customers face?
•What gaps exist in current market solutions?

•Unique Solution (Product/Service Offering)

•How does your product/service address customer pain
points?
•What specific problems does it solve?
Core Elements of a Value Proposition

•Benefits & Value Delivered

•What tangible or emotional benefits do customers get?
•How does it make their life better, easier, or more enjoyable?

•Differentiation (Competitive Advantage)

•What makes your offering different from or better than
competitors?
•Why should customers choose you over alternatives?

•Proof & Credibility

•What evidence supports your claims (testimonials, case
studies, patents, unique technology)?
•How do you build trust with potential customers?
Examples
1. Uber
“The smartest way to get around.”

Key Benefits:
► Convenience: Book a ride in seconds.
► Affordability: Cheaper than traditional taxis.
► Safety: GPS tracking & driver reviews.

2. Apple iPhone
“The experience is the product.”

Key Benefits:
► Seamless ecosystem integration (Mac, iPad, Apple Watch).
► Premium design and cutting-edge technology.
► Privacy and security features.
3. Airbnb
“Belong anywhere.”

Key Benefits:
► Unique, affordable accommodations worldwide.
► Authentic local experiences.
► Safe and trusted community-driven marketplace.

6. Spotify
“Music for everyone.”

Key Benefits:
► Unlimited music streaming.
► Personalized playlists and AI-driven recommendations.
► Offline listening and ad-free experience (Premium).
7. Amazon Prime
“Fast, free delivery and more.”

Key Benefits:
► One-day delivery on millions of products.
► Exclusive access to Prime Video, Music, and discounts.
► Convenience and cost savings.

8. Nike
“Bring inspiration and innovation to every athlete in the world.”

Key Benefits:
► High-quality, performance-driven sportswear.
► Strong brand identity and athlete endorsements.
► Innovation in materials and design.
Competitive advantage

► Competitive advantage is what sets a business apart from its competitors,

allowing it to deliver superior value to customers. It helps a startup or
company maintain market dominance and long-term success.
Types of Competitive Advantage
•Cost Leadership
•Offering products/services at a lower cost than competitors.
•Achieved through economies of scale, efficient operations, or
cost-cutting innovation.
•Example: Walmart – Low-cost retail pricing through supply chain
efficiency.

•Differentiation
•Unique features, superior quality, or branding that customers value.
•Can be based on product innovation, design, customer service, or
brand image.
•Example: Apple – Premium design, ecosystem integration, and brand
loyalty.

•Focus/Niche Strategy
•Targeting a specific market segment with specialized offerings.
•Helps smaller businesses compete against large players.
•Example: Rolex – Luxury watches for high-net-worth individuals.
Types of Competitive Advantage

•Innovation Advantage
•Leveraging technology, patents, or unique business models to disrupt
the market.
•Example: Tesla – Advanced battery technology & autonomous
driving.

•Brand & Customer Loyalty

•Strong emotional connection and trust with customers.
•Built through exceptional experiences and consistent brand
messaging.
•Example: Nike – "Just Do It" branding and athlete endorsements.