Determining the Size of the Market
Question
What is the best way to conduct market research into the size of my target market?Answer
You can estimate the overall market size based upon industry reports from industry trade organizations (track down the professional association that serves your target industry), government industry data (example: see the U.S. Census Bureau website for more information on the number of households) or public company annual reports. You should develop estimates from market penetration data, e.g. if the data you come across suggest that the average family will use three widgets per year, you can assume that the total market size is 3 widgets X the number of current U.S. households (approximately 125 million). If the widgets are only used with families with children under 10 years old, research data on how many of the approximately 125 million households have minor children and use that number instead.
- February 11, 2014
- Business Planning
- Ask a New Question
David Craig September 15, 2007
If the business idea is geared toward providing services or products to another type of business, I have found that a lot of helpful information can obtained by calling up list companies such as Dun & Bradstreet. Not long ago, I was researching an industry by this method and was able to determine the size of my target market according to the following factors:
• Annual revenue
• Number of employees
• State
• Zip code
Within a short period of time I was able to come away with a fairly accurate market size.
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