Product Management, Uncategorized

Product Opportunity Assessment

By Stratrix Staff Writer

Boston, MA | Updated 30 Mar, 2021

Product Opportunity Assessment is an evaluation of whether a product/service concept is viable and valuable within the context of market dynamics, competitive factors, emerging technologies, and emerging societal trends.

Conducting a Product Opportunity Assessment is one of the vital functions in product management, and this is an area where product management teams make an enormous difference. How they conduct a product opportunity assessment separates the great product managers from the others.

Assessing product opportunities is a synthesis of data about market structure, emerging trends, voice of the customer, internal capabilities, and overall a gut-level instinct of what works. Frequently, the correctness of the evaluation of the product opportunity can make or break a company.

In an early-stage startup, the founders are responsible for the product/service opportunity assessment. As the company adds more people, the product management team becomes the nerve center of evaluating product concept viability.

What are product opportunities?

At a foundational level, a product opportunity is any gap (perceived or real) that a new or revised or redefined product or service can fulfill and achieve market viability and profitability.

Product (or service) opportunities are everywhere and may take several different forms and formats. The product may establish a new market, undercut existing players, redefine the marketplace, offer a differentiation such as broader or narrower assortment, different pricing, or packaging, or experience.
Some products fill opportunity gaps, and while others complete adjacencies and yet others are substitutes.
Companies and entrepreneurs identify product opportunities by way of structured analysis, experimentation, and unstructured brainwaves and gutfeel and any combination of methods thereof.

Macro Analysis to Identify Product Opportunities – the PESTLE Analysis:

Wide-open spots are rarely available for the taking, but it is possible when there are significant changes in Political, Economic, Social, Technological, Legal, and Environmental spheres (PESTLE Analysis).

What is PESTLE Analysis?
PESTLE Analysis is an outside-in analysis of the impact of Political, Economic, Social, Technological, Legal and Environmental factors on a firm in general, or a product in particular

What is the Value from PESTLE?
A dispassionate analysis of external factors and trends helps avoid inward thinking and marketing myopia and focuses the firm on emergent trends that need to be considered and addressed.

Why do you need to conduct PESTLE Analysis?
PESTLE Analysis should be done both at an enterprise level and a product/offer level. Typically, at an enterprise level, an annual refresh will be desirable. At a product/
offering level, it is needed before making an investment decision.

Who conducts PESTLE Analysis?
Ideally done by a combination of the business owner, marketing, product, technology, and sales leaders. (Of course, if it is a solo entrepreneur, they will do it themselves along with any members of their brains trust.)

Level of Importance of the Artifact
High, Medium, Low

Sample PESTLE Analysis Template:

Product Opportunity Assessment - PESTLE AnalysisIt is better to conduct the PESTLE analysis on a single page so that it does not overwhelm the decision-making. For each of the factors, the product team may gather additional research by synthesizing the essence, and encapsulating them into three or four bullets will help reduce the noise and focus on the signal.

PESTLE analysis does not point to a product directly, but looking at the factors can lead to those “Aha” moments that translate into winning products. A PESTLE analysis should be a part of the product owners’ toolkit to analyze multiple factors to derive product opportunities.


PESTLE is a comprehensive analysis of factors affecting at a macro level and offers a way to identify opportunities. However, the scope and magnitude of the PESTLE analysis can lead to searching for a needle in a haystack.

Product Opportunity Analysis – The Matrix Approach:

Consultants live by the term 2*2 matrices, and these are also useful for identifying broad swaths where product opportunities may be successful. There are several ways to plot product opportunities by varying the vectors on the X and Y-axis.

Juxtaposing Market Growth Rate and Competitive Density:

The matrix comprises of market growth rate on the Y-axis and competitive density on the X-axis. The top right quadrant, which represents the high market growth rate and a low competitive density, is the product opportunity zones. In the early stages of any significant shift in PESTLE factors, such opportunity zones may emerge and exist. Still, in general, such wide-open opportunity zones are seldom available for the taking.

One may also consider the top left and bottom right quadrants for niche opportunities or a price play. The one quadrant to avoid is the bottom left where the market growth rate is low, and the competitive density is high.

2*2 Matrix for Product Opportunity Analysis:

Product Opportunity Assessment: Matrix Approach to Identify OpportunitiesOf course, you may vary the vectors on the X and Y axis of this template and plot your product/service opportunities.

Assuming you now have thought of a product opportunity that fits your competencies and market needs, the next question is whether the product opportunity is viable and valuable? This leads to the product opportunity assessment and it’s potential.

How does an entrepreneur or an enterprise conduct a Product Opportunity Assessment?

Entrepreneurs and enterprises evaluate product opportunities every day in several different ways, and some of the following are the standard tools and techniques used for assessing the size and scope of the product opportunities.

Business Case

Product Opportunity Canvas

Factor Analysis

Product Opportunity Questionnaire

Market Research and Focus Groups


Let’s briefly look into each of these methods to assess the value of product opportunities.

Business Case to Assess Product Opportunities:

In large companies, developing a business case is a foundational stage gate to securing the blessing of the management to pursue a product idea and the allocation of funding and resources. In global enterprises, without a business case (or an earlier artifact called the “Idea Screen” or “Product Screen”) no project or product gets going.

While a detailed tutorial of a business case is outside the scope of this article, here are the broad steps a cross-functional team traverses in developing a compelling business case or investment case.

Steps to Develop and Document a Business Case to Assess a Product Opportunity:

  • Conceptualize a product idea.
  • Ideate the rationale for the product (or service).
  • Gather market and competitive data.
  • Assess and understand customer needs.
  • Review the broad technology landscape and identify technologies that make the product—differentiated, viable, and valuable.
  • Synthesize the data into an investment thesis.
  • Forecast additional revenue opportunities, potential competitive moats, and cost savings (if it is a product to use internally).
  • Assess capability and resource gaps to make the product a success.
  • Calculate the cost of developing and launching a product.
  • High-level go-to-market strategy including channels, sales model, pricing model, and customer segments. (This will be refined into an in-depth GTM (Go TO Market) strategy at a later stage.)
  • Estimate the NPV (Net Present Value) of cash flows and breakeven analysis.

The business case development process can be long and arduous, particularly in established firms where the investment committee needs to decide on competing product/service opportunities and ideas.

However, there is a way to simplify the business case and reduce the cost, time, and effort. But that is a conversation for another day and a different post.

Product Opportunity Canvas:

Alexander Osterwalder’s Business Model Canvas inspires the Product Opportunity Canvas. The subheadings and categories are relevant to an evaluation of the product opportunity.

The essential elements to consider in a Product Opportunity Analysis Canvas are as follows:

  1. The Product
  2. Positioning
  3. Key Features and Functions
  4. Customer Benefits
  5. Customer Segments
  6. Channels
  7. Cost Structure
  8. Revenue Streams
  9. Critical Success Factors
  10. Key Performance Indicators (KPIs)

Product Opportunity Assessment Canvas

The answer to the vital question, “Is the product going to be successful?” is not going to emanate magically by filling in the product opportunities assessment template. The goal is to compile and answer these sections to the best of your knowledge, and by critical analysis and synthesis, one can gain a perspective.

The goal of the product opportunities evaluation canvas should not somehow make your idea look good. Still, it should be an honest attempt at figuring out the viability and the result, whether you like it or not.

Product and Competitive Factor Analysis for Product Opportunity Assessment:

Factor analysis analyzing any product or service against a set of parameters that are important to the topic in question. The success of the factor analysis for analyzing product opportunities centers around the right parameters you select and how objectively you ranked your product against the factors/parameters.

What is Factor-based Product Opportunity Evaluation?
Instead of a generic analysis of a competitor on general factors (which, of course, is essential), the factor-based competitive benchmarking provides for detailed comparison at an attribute level. And there is another version that does a standalone analysis of a product.

What is Value?
Provides a more profound understanding or product gaps and what capabilities need to be improved to compete better.

When is this needed?
Before any new product launch. For existing products or new products. For existing products, this can be a refresh on an annual basis to compare against the competition.

Who does it?
A team of product owners/managers, marketing, strategy, and market research specialists.

Level of Importance of the Artifact
High, Medium, Low

If you are comparing against the competition, then you may want to consider assigning a set of weights to different factors/categories and then calculate the weighted average of your product/service against the competition. The idea is the score will benchmark your product/service idea against the competition, and a low indicates a potential failure on your hands.
Product Opportunity Assessment: Factor-based Product Evaluation

If you are not comparing your product against the competition but just a set of factors/parameters, then you should assign a rating on a scale, and the total will provide you with a perspective of whether the product is poised to win or doomed to fail. Typically, over 70% score (or > .7 decimal equivalent) is in the potential success zone.

Of course, a product owner may choose to do both types of analysis – one benchmarking against competition and the other as a standalone product opportunity analysis. However, the scores for the company product should be the same in both versions.

Product Opportunities Analysis Questionnaire:

Product Opportunities Analysis Questionnaire, as the name suggests, is a set of questions that a product owner (or entrepreneur) or preferably multiple people will brainstorm and complete. This can be done as a Delphi method brainstorming to reach a consensus from a diverse range of opinions. Or each participant can complete the product opportunities analysis questionnaire, and then a smaller group can synthesize and come up with the optimal set of recommendations.

Either way, the questionnaire approach to evaluating product opportunities is quick and easy – unlike a formal business case.

The Baker’s Dozen Golden Questions to Assess Product Opportunities:

  1. What is the Product? (If one cannot answer this succinctly and coherently, there is a problem.)
  2. What customer/business/technology problem are we solving? (Problem space perspective.)
  3. Who will buy/use this product? (Target Customers, Customer Segmentation)
  4. What are the buyer’s main goals, objectives, and pain points? (Rationale to buy)
  5. What is the size of the market? (Target Addressable Market)
  6. What are our unique selling proposition and product positioning?
  7. Who are the leading competitors and their relative SWOT? (Strengths, Weaknesses, Opportunities, and Threats)
  8. What are the price point and expected margins?
  9. How do we build/develop this product?
  10. What channels of distribution do we use, and what is our GTM (Go to Market) strategy?
  11. What are our competencies and capabilities and gaps in pursuing this opportunity?
  12. Why is now an excellent time to pursue this opportunity?
  13. What other alternative product ideas do we have, and why do we need to prioritize this idea?

Based on the answers to these product opportunity analysis questions, the core team can determine the right course of action and provide a go/no-go decision about the value of pursuing the opportunity.

Market Research and Focus Groups:

Suffice it to say Market Research and Focus groups to evaluate new product opportunities are the realm of large enterprises.

Traditional market research includes surveying a panel of likely customers and then coming up with an evaluation of their perceptions, wants, needs, and the product fit.
Focus groups are similar, but in essence, these may be done as a group (virtual or real) to foster conversation and opinions about the product – whether and how it fits, will they buy, what price point, and why, et al.

Entrepreneurs and visionary product managers do not rely on market research or focus groups to make a product go/no-go decision but may deem it as one of the factors. More often, they will use the inputs from market research to finetune the product features.

The famous automotive entrepreneur, Henry Ford, has stated: “If I asked my customers, they would have designed a horse buggy, not an automobile.”

Market research and focus groups are specialized activities, and unless your internal team comprises of such skills, you will need to rely on external providers.

To ensure the market research firm is successful, framing the problem statement and providing in-depth details about the new product construct is essential. And of course, choosing the right audience/participants/panelists is vital as well.

Prototyping/MVP (Minimum Viable Product):

For most technology products or technology-enabled products and services, with the advent of the Lean Startup revolution, the MVP and prototyping has become the mantra of Silicon Valley and elsewhere.

The idea is instead of months-long efforts and reams of paper, a rapid prototype that provides a glimpse of the product vision is a powerful force multiplier.

The minimum viable product is not a beta product, but more a pre-alpha version with the product and engineering team standing up something with duct tape and glue.

The goal is not a fully baked part of the overall product, but a semblance of the whole product in a rudimentary form/format.

The interest and success of the MVP is a great way to validate the ultimate product vision.