Identification of Viable Business Cases

A market gap is a need of customers that is not served, or served poorly, by existing products or services. Filling it gives the entrepreneur a space with less competition.

Sources of opportunity

• Customer problems and complaints: frustration with price, quality, delay or availability.
• Changes in technology: e.g. mobile payments created new services.
• Changes in regulation, demography and lifestyle: ageing, urbanisation, new rules.
• Imports and local shortages: products bought from abroad that can be made locally.
• Own skills and work experience, hobbies.
• Competitor weaknesses.

Methods to find a gap

1. Observation and field visits: watch how people solve a problem today.
2. Surveys, interviews and focus groups with target users.
3. Trend analysis (PESTLE): political, economic, social, technological, legal, environmental changes.
4. Competitor mapping: plot competitors on price vs quality; empty areas show gaps.
5. Problem-solution brainstorming and "jobs-to-be-done" analysis.

 Quality
  high |  B        A      <- crowded
       |
       |      [GAP]       <- high quality, low price
  low  |  C
       +------------------
        low           high  Price

An opportunity is worth pursuing when the need is real, the market is large enough, and the entrepreneur can deliver at a profit.

Answer: A market gap is an unserved need; find it by studying customer problems, trends and competitors with observation, surveys and positioning maps.

A business case is a structured argument showing that an idea is worth investing in, by stating the problem, the proposed solution, the market, the costs and the expected benefits. An idea is viable if it can earn enough to sustain itself and reward the investor.

Contents of a business case

• Problem and target customer
• Proposed product or service and its value
• Market size and competition
• Operating and technical requirements
• Investment, revenue and profit forecast
• Risks and how to reduce them

Viability tests

If any test fails seriously, the idea is modified or dropped before heavy money is spent. A feasibility study done early saves cost.

Answer: A business case justifies an idea through problem, market, solution and finance; the idea is viable when it is desirable, technically feasible, financially profitable, legal and suited to the team.

Product/service design converts a customer need into a defined offering that can be produced and delivered.

Stages

1. Idea generation: from customers, staff, competitors, research.
2. Idea screening: drop ideas that do not fit the market or resources.
3. Concept development and testing: describe the concept and ask target customers for reaction.
4. Specification and design: features, materials, appearance, cost target, quality standards.
5. Prototype: a working model to test function and usability.
6. Testing and refinement: user trials, fixes, cost reduction.
7. Commercialisation: production or service set-up, pricing and launch.

Idea -> Screen -> Concept -> Design
                              |
        Launch <- Test <- Prototype

Product vs service design

Answer: Design moves from idea to screening, concept, specification, prototype, testing and launch; services additionally need the customer journey and staff behaviour designed because they are intangible and simultaneous.

A market study gathers information about customers, competitors and conditions so that decisions are based on evidence, not guesswork.

Steps

1. Define the objective, e.g. will urban families buy packaged organic vegetables?
2. Select the data type:
   • Primary data: collected first-hand by interview, survey, observation, focus group, trial sale.
   • Secondary data: from reports, statistics offices, trade bodies, websites.
3. Design the sample and tool: questionnaire with clear, unbiased questions; choose a sample that represents the target group.
4. Collect data in the field or online.
5. Analyse: find customer needs, willingness to pay, buying habits, competitor strengths and weaknesses.
6. Report and decide: go, modify or stop.

Collecting feedback

• Interviews and short surveys after use
• Ratings and reviews, suggestion boxes
• Social-media comments and complaint logs
• Usage data and repeat-purchase rate
• Net Promoter Score (NPS): "How likely are you to recommend us?" (0-10)

Feedback must be recorded, grouped and acted on; the product is then improved and re-tested in a continuous loop.

Answer: Define the objective, collect primary and secondary data, analyse needs and competition, and keep a continuous feedback loop of surveys, reviews and usage data.