Market sizing is a necessity that provides management with an objective assessment of the market situation. It allows you to see opportunities for business development, determine a place among competitors, select new areas of activity, plan production volumes.
Instructions
Step 1
Please note that there is no one-size-fits-all approach to market sizing. In addition, size (volume) and market capacity are often confused. Market capacity is the maximum sales volume that all businesses can achieve over a given period of time. Market size is the actual sales of a product in a certain market over a certain period.
Step 2
You can determine the size of the market for an entire country or region based on structural characteristics. At the same time, take into account the following indicators: production of products, volume of exports and imports, balances in warehouses. The calculation is carried out on the basis of data from the state statistics authorities. A marketer with high analytical skills can estimate the market size in this way.
Step 3
Use a production-based method to estimate market size. It also requires statistics, but is much more accurate, especially if the market is relatively transparent, served by few participants, and exports and imports are easy to identify. In our country, such markets include the market for raw materials, cars, capital construction.
Step 4
You can determine the size of the market by the volume of consumption. However, this is somewhat more difficult than evaluating the market from the production side. There is not enough statistics for this, so resort to various marketing research. This can be telephone surveys, expert opinions, personal interviews. Most often, this method is used to determine the size of the market for food, cosmetics, cigarettes.
Step 5
You can also estimate the size of the market by the volume of sales, using a retail audit, a survey of wholesale companies or expert assessments. Retail audit is based on the fact that the product is sold only through the retail network (shops, supermarkets, kiosks, etc.). The determination of the market size is carried out by summing all sales volumes in all outlets. When interviewing wholesalers, find out the volume and frequency of purchases, preference for types and brands of products, etc. You can estimate sales on the market if you take into account the conclusions of experts. The experts, as a rule, are the heads of commercial services, representatives of professional associations, journalists, analysts.
