Why is market sizing important?
Conducting research into the size of your market is important before you commit to investing time and money into launching because it can help you determine if there is even a big enough market for your product. It’ll help you find out if your product can be profitable in that market. A market analysis survey can help you make decisions about whether to move forward with your expansion and how much money to invest, or whether it’s best to shift your focus towards something else.
How can market size be measured?
The size of your target market is determined by how many customers, potential or current, there are, multiplied by how much the average consumer is willing to spend on a product or service. You can also look at the current total addressable market, which is made up by the total sales of businesses selling a certain product. You can measure market size by combining your own fresh market analysis research with historical market data and sales numbers.
Depending on the questions you ask, you can find out what your expected share of the market is—A.K.A. your serviceable obtainable market, how big the total addressable market is right now, and how big the potential market opportunity is.
What is market sizing analysis?
A market sizing analysis is the process of estimating the potential size of a market for a product or service. This is done by looking at how many consumers in the target market are interested in the product or service and how much they’re willing to spend on it. The purpose of this analysis is to help you determine if the market is big enough to launch into, market to and sell your product in.
What are different ways to measure market size?
You can use the total addressable market model, perform a bottom up analysis or top down analysis, or even look at data of multiple markets or adjacent markets that are strongly related to the market you’re trying to analyze. You can also use the historical size of a market over time to see how it could evolve over time.