Market Sizing & Opportunity Research
Understanding market size is critical to marketing planning. A market must be big enough to justify the resources and effort required to penetrate it.
It is also worth understanding the difference between the Served Available Market (SAM) – your current market, and the Total Available Market (TAM) – your potential market.
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In assessing the TAM and the SAM, we obtain as much triangulation as possible, checking the market size from a number of different approaches, including:
- Published statistics – For many products and services, there is often already plenty of published data on the size of the market through government and trade association websites, as well as market research reports, which can be purchased at a fairly modest price. We usually look ‘underneath our noses’ at these published sources first.
- Modeling – There is often a relationship between independent data and the consumption of certain products and services. If we know the market size in one country and we also have data on independent barometers in that country - such as GDP, population, electricity production and the like - we may be able to develop ratios and model what the market size could be in other countries. It requires skill and experience to find the best algorithms.
- Assessing the supply-side – All markets are supplied by other businesses. If we can identify these companies and assess their size, through aggregation, we can estimate the market size.
- The Internal view – Experienced managers often have a good idea of the market size. This knowledge can ‘lurk in their heads,’ and is never tabulated. We believe it is always worthwhile tapping into this experience and knowledge, and checking it out against other methods of market sizing.
To read one of our white papers on market sizing & opportunity research, follow the link below:
The Significance of Market Share
Case study: Sizing up potential markets
One of our clients wished to understand the size of its current and potential markets across all lines of business. The company makes conveying systems, used across many different industries - from cement to parcel delivery – and is organized into different lines of business, with managers that have good knowledge and experience within fairly narrow tunnels of vision.
What we did
We carried out desk research at the first stage, which provided a good indication of the numbers of companies using conveying systems. We knew the use and penetration of these systems, and how much they cost. With this data, we began to map out the market size and growth trends. This was followed by interviews with managers in each line of business to find out their views on the size of the competition and their market shares. By comparing the two sources of data, we arrived at the best estimates of market size, which pointed to where the most potential lay.