When considering new markets to grow your business, it's essential to understand the size of the opportunity or, as we like to say, “How big is the pie?” Answering this question early on will empower you to channel your company’s resources towards markets with high potential and to prevent wasteful efforts.
Market sizing is the key to effective decision-making.
Market sizing is a challenge for most companies, often compounded by internal politics. We are experts at providing robust market size estimates. Delivering “one truth” that allows you to move forward confidently.
Our methodologies include top-down market sizing (where we calculate market size by using a big-picture view of the market and then whittling it down to the specific country or region) and bottom-up market sizing (where we calculate the market size by multiplying a single product or service by the number of potential buyers in the market). Depending on your industry, we customize and combine approaches for best results, drawing on global and local information sources as well as support from our network of local experts.
We have calculated market size in over thirty countries.
The choice of method is largely dictated by the availability of data, time and budget. Simple calculations can be prepared quickly, with greater consideration of different variables needed for a more accurate estimation.
Top Down Market Sizing
This is where a 'big picture' view of a market is used as a starting point and a series of filters are applied to give an estimate for the specific market. A simple example of this is taking a global market estimate and splitting it to a country estimate based on GDP.
The estimate becomes more refined as more filters are applied ,e.g. accounting for differences in purchasing parity, oil component of GDP, local competition and selling prices, market maturity, brand awareness and value etc.
Bottom Up Market Sizing
This uses the reverse approach, building up the estimate from the lowest point where the product can be used. For example, if a product is sold into hospitals we could start with the number of hospital beds. Assuming we see a £5 average sales data, we can multiply £5 by the total number of hospital beds.
As with the top down approach, further refinement is often needed, e.g. to account for different sizes and types of hospital as well as differences in bed use etc.