Market Assessment Series: Part 1 | Extraordinary Business
Question 1: What is the market’s current size? And what is its potential size? Will the market expand or contract, and why?
This is the first of an 8-part series focusing on the questions a business should ask when assessing a new market.
The ability to carefully estimate the market size is crucial to successfully entering a new market. Too many business owners rush into a new market with the assumption that everyone will use their services or buy their products.
The reality is, services that could only appeal to a small population are a risky investment compared to services that have a mass-market appeal. As Entrepreneur points out, knowing your target market is crucial and it requires a reliable assessment of the market’s size.
This is so important that Forbes even ran an article on ascertaining the size of a market’s current and potential size. Hiring professional market analysis experts is one way to go. In addition to this, there is plenty of existing data from governments, trade associations, customer surveys, etc. So there’s no reason why you shouldn’t at least have an approximate ballpark figure related to your market size.
Your research into the market’s current and potential size may reveal that the size is too niche to be pursued. By realizing this early on, you will avoid wasting considerable company resources. Finding this at a later stage can be catastrophic. You should know whether the market will expand or contract, and what the reasons are for the expansion or contraction. This is part of understanding the behavior of your target market.
Market share is one of the most important metrics, perhaps the most important, to judge marketing campaigns. Market share shows a business’s performance against the competition. And getting a good understanding of a market’s size comes before a business can hope to secure a good market share.
Remember to find out how the market has changed in the previous few years. This may help you determine whether the market will grow or contract in the future. Once you have the information, you need to adjust your growth plans accordingly. Taking the time to evaluate market size will help you achieve the level of growth you’re targeting.
In the next post, we will talk about market share and how that should factor in your company’s expansion plans.
Fatima Mansoor is a writer at Aepiphanni, a small business operations and strategy consultancy that exists to help small business owners CREATE | DESIGN | BUILD extraordinary businesses. She is a freelance blogger, specializing in business & entrepreneurship, digital marketing, and health & fitness. Her focus is on creating compelling web content for small and medium businesses form diverse industries. She mostly writes for entrepreneurs and marketing agencies across the US, Australia and UK.
We would love to hear from you. Please share your thoughts and comments below. If you are seeking advice on how to grow your business, streamline systems and processes, implement software or overcoming challenges to growth, please contact us, directly or submit a request for a complimentary Coffee & a Consult to learn how we can help you CREATE | DESIGN | BUILD an extraordinary company.