For any startup business, market research is the most critical step. One important part of it is estimating the target market size. Generally, the concept is fairly easy to understand but achieving it can be a challenge. So why do we have to do it? For instance, let’s say you already know your target market but you haven’t estimated the size of it. This could lead to you doing business in such a small market, which is impossible to make some profits.
Importance of estimating the target market size:
- Allows you to reliably evaluate opportunities.
- Makes planning R&D and marketing strategies easier.
- Recognize a deeper understanding of growth levels that you’ll need to achieve business goals.
- Lets you see if your product is needed in the market or if you’ll be making a profit out of it.
- Serving as a basis for investors.
- Helps startups and even established businesses to form strategies to assure profit and growth.
Easy way to estimate
If you Google how to do this, you’ll see tons of ways. In particular, for startups, it may be quite difficult to understand. Here are some easier ways.
First, you need to find out how you can answer these questions: How many people would want/need the product? If they all bought, how large is the market in terms of money or units?
The easiest way to find the answer to these is by looking for industry analysis. So, what is this industry analysis? A market assessment tool for businesses that also provides an idea of the size of a specific industry. It includes evaluating the environmental, political, and business factors that affect the growth of the sector. Significant factors can include suppliers’ and buyers’ strength, competitor status, trends, new market entrants’ probability, etc.
Pretty much, industry analysis is like the cheat sheet for estimating target market size. So how can you get it? To get a hold of this analysis, you may need to hire an industry analyst. They can create research reports that can provide you with a deeper understanding of your target market.
Today, there are a lot of online companies that offer these services. Just find the best that suits your products or niche. Likewise, if you have access to a university library, you can get a free industry analyst report. Make yourself an expert at googling. In addition, if you dig deeper into the internet, you can find industry analysis reports that nearly or perfectly suits your products or niche.
Once you have an industry analysis that suits your products, so you can estimate the size of your target market. At this point, it’s just a matter of using mathematical equations or such with the factors that analysis provides you. Besides, it’s not perfect, but in business, it’s better to rely on numbers and computations rather than assumptions and theories.
Related Topics : Target Market – How to Identify Your Customers