Why Keeping Tabs on Your Market Size is Paramount for Business Success
A thorough market analysis is the cornerstone of success for any marketing campaign or expansion efforts made by a company. Resorting to a bleak alternative of ‘guesswork’ or intuition often proves to have adverse effects. The first step in a b2b market analysis is to identify the market size. When the b2b market size is […]
A thorough market analysis is the cornerstone of success for any marketing campaign or expansion efforts made by a company. Resorting to a bleak alternative of ‘guesswork’ or intuition often proves to have adverse effects. The first step in a b2b market analysis is to identify the market size. When the b2b market size is identified, companies can easily determine how to invest in R&D budget for the year.
What is b2b market size?
B2B market size refers to the number of individual companies in a market who are potential buyers or sellers of a product or service. In fact, market size is a key component of strategic marketing planning. Market size is a measurement of the total volume (number of buyers) of a given market. Market size is typically depicted in terms of total people or potential sales volume. It is a quantified value of a designated target.
Importance of b2b market size analysis
Having a clear-cut idea of the size of the target market allows companies to fully assess opportunities and accurately plan an approach for investments more wisely. However, a market size calculation alone is not the only factor to be considered while making an investment decision; other research inputs on the strengths and weaknesses, of the competition, anticipated profit margins and return on capital are essential.
Strategies to get your market size formula right
Every researcher aims to attain the maximum accuracy at the lowest cost possible. By being explicit about the facts and assumptions used to generate a market size estimate, we can identify critical factors that need to be addressed in downstream development business planning activities. Let’s take a look at some of the key steps involved in determining the market size of your business:
Adopt a top-down approach
Most businesses start determining the size of the market using a top-down approach. In this technique, companies begin by researching the total market for their product or service. Then a reasonable estimate of their portion of that market is formed, which becomes their available market. Thorough research of the market, the industry, and competitors are the key to accurate estimation. This also involves getting access to and evaluating the figures from various government and trade associations. The market size data is often accurately recorded by government publications. Researchers can also begin by identifying any trade associations, which could be a repository for sales or production statistics.