Question

Topic: Strategy

Determining Market Size

Posted by Anonymous on 8/22/2004 at 9:36 PM ET 500 Points
I am currently writing our business plan and need a solution for finding the potential market size for our customer acquisition and financial services solutions. We currently sell electronic check processing solutions to retailers and business to business clients. We also publish an upscale magazine called The "Best of Long Island that we plan on expanding to other markets. This lifestyle magazine reaches upscale consumers who can afford to purchase products and services from our upscale advertisers. I need to find the size of my local market and the national market.
To continue reading this question and the solution, sign up ... it's free!
SUBSCRIBE
Or, SIGN IN

RESPONSES

  • Posted by Chris Blackman on 8/22/2004 at 10:27 PM Member
    This sounds like two questions in one.

    To determine the potential market size for check processing by retailers and b2b prospects, you need to have defined the geographic territory into which you are planning to sell these services. Let's assume you are talking Eastern Long Island... You can probably get statistics from the NY State Sales Tax office on number of businesses registered. Or try the local chambers of commerce - although that may involve quite a few calls to a number of organisations in each town. Failing that see if the Federal Bureau of Statistics (or whatever they are called) has statistics by zip code you can access.

    Second part - the potential size of the local and national market for an upscale magazine - isn't it mainly going to be of interest to inhabitants of LI? Plus those fortunates with weekenders in the Hamptons, etc? You need to access statistics on the number of people or households with an income in your target range within the zip codes you plan to serve to be able to estimate this. Fed Bureau of Statistics again... You might also look at the circulation of comparable magazines to see what they are achieving as you will be catering to the same market.

    Just a thought, but so many companies seem to be targeting HNW's (High Net Worth People) - you may find a massively broader market lower down the marketing pyramid, with a conseqently larger prospective base of potential advertisers.

    Just my 2 cents worth.

    Hope this helps.

    ChrisB
  • Posted by Mushfique Manzoor on 8/23/2004 at 8:14 AM Accepted
    Hi korlean

    CrisB gave great solutions in terms of US/NY. here are my 2 dime in a more generalistic terms.

    for e-Check processing solutions

    - first determine the geographic area you want to serve.
    - then take help of the local Statistics Office/Chamber of Commerce to get the entire population of businesses that fall in your category and make list.
    - Find out the existing customers you have from this list
    - Find out the cusotmers who are using your competitors service/ no service at all. thats the max incremental potential customer for you.
    - Find out the average frequency of purchase of your-type service per customer.
    -Multiply that frequency with no of non-customers. This will give you potential new business.
    - find out the frequency and total no of purchase from other companies by customers. This is your ready potential business to capture from other companies.

    for upmarket magazine, both local and national

    - find out the income group of the target customers and from Statistics Dept get the total household of that income & target group.(both local and national)
    - look at the circulation of all other competition as well as magazines that cater to your same target as well as income groups.
    - combined circulation of all magazines(incl urs) is the potential market.

    hope this helps.

    cheers!!
  • Posted by Peter (henna gaijin) on 8/23/2004 at 8:28 PM Member
    I agree with what others have said already. Particularly in that you are really working with 2 very different products (electronic check processing solutions and the magazine). You really need to work these as separate businesses, with separate plans.

    One challenge people often have after they determine the market size is determining what share they feel they can get. Often this shows up in people being way too optimnistic ("everyone could use our product").

    The numbers I have pretty consistently heard is that you should shoot for betwen 3 and 30% of the potential market. If you feel you can get more, you will likely be disappojnted. If you feel less, you probably have defined your market too broadly, so should redefine it as more of a niche until you are in that range.
  • Posted by Carl Crawford on 8/25/2004 at 4:41 AM Member
    hi korlean

    www.va-interactive.com/bankofamerica/resourcecenter/workshops/competition/c...

    hope this helps

    Sweetasman01
BACK TO TOP

Post a Comment

Related Discussions

Community Info

Top 25 Experts
(Strategy)