Five Strategic Methods To Work Out Your Market’s Size

by | Oct 11, 2016 | Market Research

Strategic methods to work out your market’s size are an important component of market research. If you’re developing a product, you firstly need to know your target market is big enough for your final product to be commercially viable. Secondly, you need to ensure that there is a large enough niche that you can serve better than your competition does. Here are five strategic methods for calculating your market’s size:

Know What Sub-Segment Of The Market You’re Targeting

MeasuringIt’s practically unheard of for a company to have total market domination. Even the major corporations have to compete for market share. For this reason, spend time understanding your initial customer base – who your customers are, what matters to them, and how you can meet their needs better than the competition.

Work out how large this sub-segment of the available market is and position yourself as their best option before setting your sights on expansion. This is one of the crucial strategic methods to ensure you’re targeting the right audience.

Get Realistic Market Size Projections Through Top-Down Estimations

Top downTo get a concrete idea of what kind of market share you can expect once established, use strategic methods such as top-down estimations.

First, examine the total potential market for your product or service.

If a major player in your niche took X million net earnings for the past year, subtract this from the total amount consumers spent in your niche to work out the proportion of consumer spending that you could attract to your business. This strategic method allows you to make realistic projections about your potential market share.

Next, Start From The Ground Up

Ground upOnce you’ve measured down from the total size of your possible market to find the market that isn’t already heavily monopolised, work from the bottom up using strategic methods. Work out:

  • How many local merchants could sell your products
  • How many competitors sell similar products in this space

This will help you understand in real terms how much scope there is for expansion. Create a five-year plan using these strategic methods: what could your local market share look like? Could you feasibly take home 5% of consumer spend with thorough planning and strategy?

Research Your Competitors

ResearchResearching your competitors is one of the essential strategic methods to work out your market’s size. Who are the major players in your niche? For example, if you supply parts for the manufacturing industry in an area that isn’t oversubscribed, you could have substantial market share.

However, if you enter a highly competitive space such as hotel booking services, you might struggle to get even 5% of market share without an excellent marketing plan.

These strategic methods help you assess your competition and market positioning effectively.

Determine The Size Of A Static Market

SizeBuilding your market share is tougher when you are competing with other services or products in a fixed, static market. If there is a more or less fixed proportion of demand, you will need to apply strategic methods to further your market research. For example, in the hospitality industry, you will need to work out whether budget or luxury services are on the upswing (this will depend on the economic climate) and adjust your marketing plan accordingly. These strategic methods ensure that you adapt your approach to meet market realities.

The key to using all these strategic methods to work out your market’s size well is making realistic projections and estimates. Be objective and don’t let a partial perception of your product or service cloud your estimation of actual market availability.

If you’d like to have expert market research conducted for your project, contact Interact RDT today.

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