6.2. Sizes, Segments & Trends
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Describe the specific markets where the business operates and/or plans to enter. Explain how they have evolved and how they are segmented. Explain any historic shifts in consumer, product and technology trends and review any regulatory or structural restrictions on trade.
Claiming to have a unique offering is not an excuse for not doing a market assessment based on comparable indirect offerings. If target markets cannot be assessed then it is improbable that they can be sold into.
Use simple tables and charts to illustrate key points and to analyze structures and trends. Place detailed analyses in an appendix.
Here is an example of a simple table reviewing the size of key segments within an established market during the last four years:
Highlight the segments you are targeting and drill down into them as illustrated in this chart which breaks the total market into excluded, unserved and served low- and high-priced segments. Discuss channels of distribution, promotional methods and marketing expenditure levels within the served segments.
In some cases, it will be very difficult to analyze or segment a market because it is new or poorly researched. In these circumstances review proxy or adjacent markets to gain insights in demand for similar offerings or related solutions and use the results to make inferences about the target markets.
Another method that could be used for business-to-business offerings would be to identify or quantify key prospective purchasers within the target market, estimate the theoretical value of their purchases and then scale this back to take account of the early purchasers and so on. Here is how this might be approached:
Whilst this assessment is very speculative, a major benefit of having a limited number of prospects is that they can be individually identified for marketing purposes.
This "bottom-up" approach could also be used to help determine the size of a market within a heavily trafficked market segment. For example, if planning to open a restaurant within an established major shopping center, it should be possible (by simple observation) to assess the number of existing outlets, their table numbers, utilization rates, menu prices and favorites and thereby determine the size and segmentation of this local market, in value and volume terms.
In other circumstances, the market may be so big or broad that measurement might appear pointless, for example, the world market for video downloads or the US market for medical drugs targeting specific diseases. Here are two approaches that could assist:
Never ever base your market assessment on superficial generalizations like "According to well-known research firms, our market is growing at 100% a year and will reach $10 zillion by 20XX".
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