Question

Topic: Research/Metrics

Developing Market Opportunity Analysis

Posted by Anonymous on 2/17/2010 at 2:22 PM ET 250 Points
I'm trying to determine the market opportunity in a specific city for a specific industry. The problem I have is the customer base is quite large and I'm struggling with how to get started.

I am working in the power generation industry, and our client base can range from a grocery store to a data center to a nursing home to a school..etc.

I want to determine an approximate value for how much opportunity exists (i.e. how many customers, buying potential, etc) for one specific city. Any suggestions on where to start?

I appreciate any and all feedback! Thanks!
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RESPONSES

  • Posted by Frank Hurtte on 2/17/2010 at 2:35 PM Accepted
    Amy,
    When I calculate market potential in instances like this I work from two different angles.

    1) Are there a couple of data points where you know the total usage? For instance, electical usage in Ohio or electrical usage in St. Louis.
    2) Is there a bigger data point - ie electrical usage in the US...

    I then try to break down the electical usage by person, by business classes, etc.

    Is this 100% accurate? No, but the number of data points can help you improve your accuracy.
  • Posted by Peter (henna gaijin) on 2/18/2010 at 12:25 AM Accepted
    If you are selling power, another option would be to see if you can find information on number of meters in that city, so you can get an average usage per meter.

    With this info, or the averages that Frank recommended, you can then possibly compare it to other cities where you have customers, so have exact data. With that, you can hopefully get better estimates of what is going on, and find areas with variance (maybe the new city is hotter than the one you current sell to, meaning more air conditioning use in the summer) that you can perhaps exploit.
  • Posted by koen.h.pauwels on 2/19/2010 at 4:00 PM Accepted
    Frank and Peter offer excellent advice on how to estimate market potential. Once you have some idea about this, you still need to determine how much marketing opportunity exists for your firm. Typical questions to answer:

    1) are there any customer segments unserved by the existing providers (eg because they are too small)?
    2) how happy are your competitors' customers with their current solution? You will have to ask around, but a few respondents are often enough to get an idea. Also, frequent switching between providers indicates customers are looking for something better
    3) does your company offer something that is important to customers but the competition can not match?
    4) if (3) is the case, is it easy to reach these prospectw with your message and are they able to switch if they want to (i.e not tied to a long-term contract)

    Good luck!
  • Posted on 2/19/2010 at 5:03 PM Author
    Thanks for all the advice! I have decided to start by breaking it down by segment. I am focusing on 2 key segments we feel are a good target for us. I have compiled a list of potential customers and am now working to determine approximate usage requirements. That is the difficult part because of how much these places vary in size. I am going to try to estimate with a city we are more familiar with by taking their approximate usage requirements and their population to determine usage by person, then apply that formula to the new city.
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