How Do You Measure Market Size?

 

For my entry on how to measure market size I utilised the research guide from Tufts University; ‘Entrepreneurial Leadership ELS 101: Entrepreneurship and Business Planning’. While there were many others, Tufts University is renowned for its research, and the other information pages I found seemed too casual/not credible enough. While the reference is American and refers to overseas industry, it is still useful.

 

The article is broken up into convenient and concise sections, beginning with 'Steps in the Process'.

The first is understanding what industry will accommodate your product or service. Tufts reccommends to research your chosen industries NASC - North American Industry Classification System; this is based on an economic concept, and it si the way in which Census Bureau categorises business establishments (ohio.edu 2010). SIC - Standard Industrial Classification; this model classifies businesses using a numerical system (ohio.edu 2012). These statics if available can show the way in which your chosen industry is received in the "hierarchy of business sectors".

Also included is research of the different types of media available, to assist you ingaining an understanding of the shares a company has, or its market growth rates.

The last point in this section instructs to know your potential competitors; understanding where they sit is important - you want to be able to give yourself the best advantage you can and this is not possible without understanding what other companies have on offer.

 

The next section is ‘Introduction to Market Research’. Market research is the first thing that comes to my mind when I think of measuring market. Tufts explains it as systematically gathering information about a target audience regarding customers, competitors, statistics and qualitative sources, by using many sources, as using only one is inadequate. It’s painful how much of this Facebook has the ability to do without having to pay for it.
((Sometimes I have moments where I feel it’s a giant ugly thing that I don’t want to be a part of but for the most part it’s just so darn convenient))

Next on the list is ‘Market Size, Market Share, and Market Characteristics’. These are explained as the size of a potential market, and refer fundamentally to percentages that come from sales volume, profits, or targeted demographic. Size and share are referred to as key factors that consider whether there is one dominating company or many smaller ones, they also anticipate regulations and costs.

Industry dynamics – What are they? What is moving and what is stagnating?

Competitors – These can determine you success or failure...Who and what are they?

The article continues its astute list of things to consider when measuring market;

Suppliers and Supply Chain, Buyers and Customers, Substitutes, Barriers to Entry, & Industry Ratios.

The article finishes with a more personal note, about researching relevant information from credible sources, and discusses ways in which to measure those markets that are only newly created, that are yet to be given industry codes or associations. These are in congruence I think with your start-up; in that you need to know and understand the solution or need that you are trying to provide for.

References:

NAICS and SIC - http://www.library.ohiou.edu/subjects/businessblog/what-are-naics-and-sic-industry-codes-and-how-do-i-use-them/

Tufts - http://researchguides.library.tufts.edu/content.php?pid=73990&sid=548940