assignment
Utilizing an Alternative Method to Effectively Estimate Market Size
Market Size Estimation
“How big is the market?” It’s one of the most common questions our clients ask. It can refer to a market the client is already in or one it is considering entering. Knowing market size can help:
•
•
•
•
Evaluate whether a market opportunity merits investment
Benchmark against the competition
Set performance goals
Determine where there is room in the market for organic growth
Segmentation of a market enables refinement of a company’s strategies and goals by identifying the most promising geographies, customer types or application areas.
This white paper describes an “alternative” method to estimate market size using secondary research and qualitative input.
Before describing this method and presenting some examples, we will summarize standard approaches to determining market size. We will revisit these standard approaches at the end of the paper in comparison to the “alternative” approach.
Standard approaches
Collect published data
Big markets, the kind that many people are interested in, get a lot of attention. In turn, the high level of interest usually means someone is tracking the market. As a public service, government agencies track markets in which there is broad interest. Syndicated research firms invest in researching markets for which they can sell the results widely enough to generate a return. Similarly, companies like Nielsen1 compile point-of-sale scanner data because they can sell the results to enough clients to earn a profit. Trade associations research markets using their members’ funds for their members’ benefit.
For the U.S. market, published market size data are common; elsewhere, coverage is less prevalent. Similar sources of market data are available across geographies, although published information is most commonly available for the U.S. market. For markets where published data are available, this data
Market Size Estimation
“How big is the market?” It’s one of the most common questions our clients ask. It can refer to a market the client is already in or one it is considering entering. Knowing market size can help:
•
•
•
•
Evaluate whether a market opportunity merits investment
Benchmark against the competition
Set performance goals
Determine where there is room in the market for organic growth
Segmentation of a market enables refinement of a company’s strategies and goals by identifying the most promising geographies, customer types or application areas.
This white paper describes an “alternative” method to estimate market size using secondary research and qualitative input.
Before describing this method and presenting some examples, we will summarize standard approaches to determining market size. We will revisit these standard approaches at the end of the paper in comparison to the “alternative” approach.
Standard approaches
Collect published data
Big markets, the kind that many people are interested in, get a lot of attention. In turn, the high level of interest usually means someone is tracking the market. As a public service, government agencies track markets in which there is broad interest. Syndicated research firms invest in researching markets for which they can sell the results widely enough to generate a return. Similarly, companies like Nielsen1 compile point-of-sale scanner data because they can sell the results to enough clients to earn a profit. Trade associations research markets using their members’ funds for their members’ benefit.
For the U.S. market, published market size data are common; elsewhere, coverage is less prevalent. Similar sources of market data are available across geographies, although published information is most commonly available for the U.S. market. For markets where published data are available, this data