Question

Topic: Strategy

Determining 'market Size'

Posted by Anonymous on 2/10/2005 at 5:33 AM ET 125 Points
Do we have any scientific methods to determine a 'Market Size'? Say a startup company has a software product for a particular industry.
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RESPONSES

  • Posted by telemoxie on 2/10/2005 at 8:27 AM Accepted
    If I were in your shoes, I'd use company demographic info (number of employees, annual sales) from sites such as www.zapdata.com to estimate the size of my target market, and if your competitors are small, relatively focused companies, I'd build a list of competitors and look them up on the same site, to get an estimate of their size. (For example, if IBM is a competitor, the revenues of IBM will not be a very good indicator of your specific market size).

    I'd also research issues such as: How much do my competitors charge? How often do folks in my industry change software solutions?

    Are you competitors public companies? If you, you can download their financial reports from a variety of sites (e.g. www.freeedgar.com) and those financial reports may contain a suprising amount of info not only on opportunities, but on risks and on potential strategies as well.
  • Posted by Markitek on 2/10/2005 at 4:39 PM Member
    Market sizing is a guidepost process, but I'm afraid hardly a science. Here are some sources I use:

    The Census. This is the least useful and most available.

    Sales figures from public companies that must report the information which I can then use to extrapolate non reporting companies based on size

    Demographics by behavioral characteristics

    Available secondary research from associations and analysts that track the market

    The number and significance of analysts themselves is a key indicator: the more that track the bigger the market

    Likewise, look at the number of trade magazines that service the marketplace--you won't get units or revenue size necessarily but you'll be able to get a sense of the overall size of the market in general: the more magazines (and the higher the ad rates) the bigger the market.
  • Posted by Mushfique Manzoor on 2/12/2005 at 12:28 PM Member
    hi roland.ec

    great advice from experts above especially how to determine the market size by yourself. i agree that determining market size is a practical process but not a science.

    an alternative to the tedious process of determining market size by yourself is to procure off-the-shelf market research data from research agencies like ACNielsen. they have these types of data for various industries. this data will give you the approx total market size along with the market share held by existing players.

    hope that helps.

    cheers!!
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