Questions

What are some resources for evaluating potential market size?

I'm in an ideation phase of a new product, and would like some resources for identifying Total Addressable Market, Target Market, and Obtainable Market.

3answers

To determine market size, you will need to look at potential customer data or revenue/transactions each year.

You will need to:
1. Define your target customer and audience
2. Estimate audience size and target customers
3. Determine growth rate if possible taking into account organic and churn
4. Calculate the market size for both revenue and products/services sold

In terms of resources:
1. You can use bottom up data e.g. if opening a men's barbers then x number of men have x number of haircuts per year x average cost (in your target geography)
2. Top down data - get data from industry associations and apply your assumptions

This process isn't complicated but it is time consuming when done comprehensively.

You can also find freelancers on various sites who will do all this background research for you and who sometimes offer a secret shopper service calling competitors to get data such as for pricing.

Good luck!


Answered 12 days ago

There are so many resources just for identifying one attribute and enlisting all of them is difficult. Let us look at an example. The first one that you have mentioned is total addressable market. So, it is also known as the market size. Now to understand this one attribute alone you need to first define your target customer. Once you have done that, you must estimate the number of target customers, then determine your penetration rate and only then can you calculate the potential market size based on volume and value. My suggestion is try looking for mathematical formula instead of resources. For example, we will again go to market size. To calculate the market size the easiest formula is to count all the potential customers that would be a good fit for your business and multiply that number by the average annual revenue of these types of customers in your market.
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Answered 11 days ago

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