When developing products and when setting or expanding the product distribution channels, understanding the market potential is essential in making strategic decisions.
The market will consist of the target market, the market that can benefit from your product, and of the market portion, the market available for your product to be competitive in.
The first step in market sizing is market assessment where you will be focused on identifying the market areas and the size of these areas.
This is a good time to invest in market reports to understand and take advantage of market trends. Don’t limit yourself to one resource. It is likely that there will be conflicting reports that will be critical in the evaluation process of.
A widely known report store is Mintel Reports. These reports can provide data on market size and segmentation including customer research, sales data, competitor analysis, customer purchase decisions and influences. The market trends and demographic breakdown will be key in identifying the market potential and enable you to spot opportunities where you will be able to see growth and forecast more accurately.
These market reports can be every insightful; however, disruptive and alternative technologies or products can play a large role in changing the market trend and affecting the potential market. A great example of these disruptive technologies is Netflix where the wide spread of Blockbuster DVD stores and mailing subscriptions were completely overtaken by the new streaming platform. Another example is Kodak where the company neglected to address the upraise of the digital technology alternatives to the standard photography market.
The second step in market sizing is customer identification and targeting. Some customers will be highly likely to adopt new products quickly while others might be later adopters. Other consumers that might have a great impact on the product interest are opinion leaders who can influence the adoption of the product by other users. There will be other customers that might offer indirect influence over the adoption of the product such as companies that offer complementing products or services. In this second step the author also recommends identifying the purchase decision makers that can be influenced through personal connections and voice of the customer interviews.
The third step in market sizing is to conduct a competitive assessment. Knowing the competition in the market will be essential in assessing the opportunities and threats. Your competitors will have a value proposition and feature differentiation that will likely set them apart from you and other competitors. Understand these differentiating features (product, service, or price) so that you can identify key competitors, their customer potential, and how your product can be differentiated.
Understanding the market will enable PMs to validate their market potential at the development phase and preparing for market distribution and support after product launch.
If you have your own market sizing advice or experience please share.
How To Identify Your Market And Size Up Competitors by Rebecca O. Baley https://www.forbes.com/sites/rebeccabagley/2013/10/02/how-to-identify-your-market-size-up-competitors/#7ab459566834