The challenge that many corporations face is their inability to size their relevant markets, significantly if they're competing in new or rapidly evolving markets. On one hand, the very fact that the markets are new or evolving is the reason why there might be a large chance to ascertain them and become the market leader. Conversely, investors, shareholders and senior management are typically skeptical to take a position resources because, since the markets don't nonetheless exist, the markets may be too little, or not extremely exist at all.
In developing over 200 business plans for rising ventures, venture capital firms, SMEs and Fortune five hundred spinouts, I have encountered the challenge of sizing emerging markets various times and has developed a proprietary methodology to resolve the problem.
To start, it is vital to understand why ancient market sizing methodologies are ill-equipped to size emerging markets. To illustrate, if a analysis firm were to use traditional methods to size a mature market like the occasional market within the United States, it might consider demographic trends (e.g., aging baby boomers), psychographic trends (e.g., increased health consciousness), past sales trends and consumption rates, value movements, competitor brand shares and new product development, and channels/retailers among others. But, conducting such an analysis for emerging markets presents a challenge as many of these factors (e.g., past sales, demographics of the customer when there are no current customers) don't exist as a result of the markets are presently untapped.
The methodology needed to size these new markets requires 2 approaches. Each approach will yield a totally different approximation of the potential market size, and usually the figures can work along to supply a solid foundation for the market's potential. I decision this first approach "peeling back the onion." In this approach, I begin with the generic market (e.g., the coffee market) that that company is making an attempt to penetrate, and remove items of that market that it can not target.
For instance, if the company created an ultra high-speed low maker that retailed for $600, it would initially cut back the market size by factors like retail channels (e.g., mass marketers wouldn't carry the merchandise), demographic factors (lower income customers wouldn't purchase the merchandise), etc. By peeling back the generic market, you finally will be left with solely the relevant portion of it.
The second methodology requires assessing the market from many angles to approximate the potential market share, answering questions including:
o Competitors: who is competing for the customer that you may be serving; what's in their product pipeline; once you unharness a product/service, how long will it take them to enter the market, who else might enter the market, etc.
o Customers: what are the demographics and psychographics of the customers you may be targeting; what merchandise are they currently using to meet an analogous want (substitute product); how are they currently purchasing these product; what's their degree of loyalty to current providers, etc.
o Market factors: what other factors exist that will influence the market size - government laws; market consolidation in related markets, price changes for raw materials, etc.
o Case Studies: what different markets have expertise similar transformations and what were the client adoption rates in those markets, etc.
Whereas these methodologies are usually a lot of painstaking than traditional market analysis techniques, they'll be the distinction in determining whether or not your company has the next iPod or the next Edsel.
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Aaron R Daniel has been writing articles online for nearly 2 years now. Not only does this author specialize in Marketing, you can also check out his latest website about:
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