1. “How Big Is My Market?” Market Sizing Basics
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“How Big Is My Market?” Market Sizing Basics
Suggested citation
Kula, H., Chung, H-D. & Kim, C.S.Y. (February 27, 2014). “How big is my market?”: Market sizing basics for librarians and information professionals. Business & Finance Division, Special Libraries Association. [Webinar].

2. Agenda Market Sizing Framework: Q & A Why Market Sizing? Definitions
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Agenda
Market Sizing
Why Market Sizing?
Definitions
Framework:
Segmentation
Estimation modeling
Sourcing the data
Q & A

3. Why Market Sizing? DECISION-MAKING CONTEXT INTELLIGENCE NEEDS
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Why Market Sizing?
DECISION-MAKING CONTEXT
INTELLIGENCE NEEDS
Product launch
Strategic planning
New business ventures
Market size
Market growth
Customer perceptions and pain-points
Competitive landscape
Key resources and technologies
Market expansion
Market entry
Distribution channels
Acquisition targets
Sales
Marketing
Business development
Lead generation
Competitor beat sheets
Procurement
Strategic sourcing
Supply risks
Alternative supply sources
Adapted from Global Intelligence Alliance, 2012

4. Definitions Market Customers Industry Sellers or providers SEGMENT
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Definitions
Market
Customers
Industry
Sellers or providers
SEGMENT
CUSTOMER
CUSTOMER
CUSTOMER
MARKET
CUSTOMER
CUSTOMER
CUSTOMER
INDUSTRY
COMPETITOR
COMPETITOR
COMPETITOR
SECTOR
COMPETITOR
COMPETITOR
Adapted from Global Intelligence Alliance, 2012

5. Definitions (cont’d) Market Size
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Definitions (cont’d)
Market Size
Total number of products or services that an industry sector is able to sell to a specific segment of the market
Within a certain timeframe (e.g., 1 year)
Volume (e.g., shipments, weight, single units) Value (e.g., dollars)
Adapted from Global Intelligence Alliance, 2012

6. Framework: Three Aspects to Market Sizing
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SEGMENTS
ESTIMATION MODEL
DATA SOURCES
Framework: Three Aspects to Market Sizing

7. Segmentation PRODUCT GROUP Total Addressable Market PRODUCT PRODUCT
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Segmentation
PRODUCT GROUP
Total Addressable Market
PRODUCT
PRODUCT
SEGMENT
SEGMENT
SEGMENT
SEGMENT
CUSTOMER
CUSTOMER
POPULATION GROUP
Adapted from Global Intelligence Alliance, 2012

8. MAKING UNDER $100,000 OFTEN IN ENTRY-LEVEL JOBS
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YOUNG ADULTS AGE 20 – 35
MALE AND FEMALE
MAKING UNDER $100,000 OFTEN IN ENTRY-LEVEL JOBS
URBAN COLLEGE TOWNS
American Apparel website, 2014

9. Socio-Economic Branding
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Socio-Economic Branding
HAUTE COUTURE
LUXURY
AFFORDABLE LUXURY
MAINSTREAM
DISCOUNT

10. Apparel in Canada SALES OF APPAREL BY CATEGORY CAD (MM) 2010 2011 2012
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Apparel in Canada
SALES OF APPAREL BY CATEGORY
CAD (MM)
2010
2011
2012
CLOTHING
28,263
29,195
30,166
FOOTWEAR
6,490
6,823
7,095
SPORTSWEAR
5,155
5,418
APPAREL
36,018
37,262
Adapted from Euromonitor International, 2013

11. Women & Children’s Apparel Wholesaling in the U.S.
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Women & Children’s Apparel Wholesaling in the U.S.
Adapted from IBISWorld, 2013

12. Negotiating Specificity
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Negotiating Specificity
TOO GENERAL
TOO SPECIFIC
Number of U.S. business travelers aged 45+ travelling economy class by mode of transportation & average distance of trip.
If the segmentation is too specific, it will
be difficult, if not impossible to find data.
If the segmentation is too general,
the data has less practical value.
Number of U.S. business
travelers (current year)
e.g., Travel pillow company
Adapted from Global Intelligence Alliance, 2012

13. New Market or New Segment?
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New Market or New Segment?
COMMODITIES
DIFFERENTIATED
PRODUCTS
So new to the world perhaps a market does not even exist yet.
Well-organized exchange and structured data likely available.
Adapted from Global Intelligence Alliance, 2012

14. Segmentation PRODUCT GROUP Total Addressable Market PRODUCT SEGMENT
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Segmentation
Total Addressable Market
PRODUCT GROUP
SEGMENT
PRODUCT
POPULATION GROUP
CUSTOMER
Adapted from Global Intelligence Alliance, 2012

15. Markets: Total, Sales, Target
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Markets: Total, Sales, Target S
Total Addressable
Perfect World Scenario
No competitors
All the financing available to grow
Adapted from Blank & Dorf, 2012

16. Markets: Total, Sales, Target
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Markets: Total, Sales, Target S
Total Addressable
Sales Addressable
Real World Constraints
Geography
Competition
Sales channels
Adapted from Blank & Dorf, 2012

17. Markets: Total, Sales, Target
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Markets: Total, Sales, Target S
Total Addressable
Sales Addressable
Target
Priority Scenario
Most desirable
Most feasible
Adapted from Blank & Dorf, 2012

18. Framework: Three Aspects to Market Sizing
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SEGMENTS
ESTIMATION MODEL
DATA SOURCES
Framework: Three Aspects to Market Sizing

19. What’s an Estimation Model?
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What’s an Estimation Model?
Vaccination coverage
Price for one booster dose in DEFENSE scenario
Market size
(units)
Birth cohorts
Toddler cohorts
Price for one primary dose in DEFENSE scenario
Child cohorts
Adolescent cohorts
Price per country for one primary dose
# of primary shots/year
# of booster shots/year
Price per country for one booster dose
Public channel %
(value in USD)
Private channel %
Pre & post public market switch year x + =
Adapted from Global Intelligence Alliance, 2012

20. Two Approaches Top-down Bottom-up
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Two Approaches
Top-down
Bottom-up
Statistic
Data point
Total market size
Assumption
Supplier 1
Segment total
Supplier 2
Supplier 3
Supplier 4
Top-down estimates approach the true value from above, by starting with broad indicators which are narrowed down using assumptions. Pro Often a quicker and easier way to size a market Con Tends to give too high estimates
Bottom-up estimates approach the true value from below, by summing up known supply data from market participants. Pro Often considered more conservative (accounts for capacity limitations of the industry). Con Usually requires primary research, therefore often expensive to do.
Source: Global Intelligence Alliance, 2012

21. Board Games: Top-down HH with Child
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Board Games: Top-down
HH with Child
Total market size: Board Games in U.S.
HH Adults
% Purchase BG
Total HH Adult Market
# of Games Purchased per year
Price per Game
Total HH w Child Market
Adapted from Gentschev, 2010

22. Board Games: Bottom-up
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Board Games: Bottom-up
Hasbro
% (Board Games)
Total market size: Board Games in U.S.
Mattel
Ravensburger
% Revenue
(Puzzles)
Rio Grande
(Strategy)
% (U.S. Sales)
Total 1
Total 2
Total 3
Total 4
Adapted from Gentschev, 2010

23. Triangulation Estimate A (e.g., primary research) Estimate B
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Triangulation
Estimate A
(e.g., primary research)
Estimate B
(e.g., product complements where market sizes are known)
Estimate C
(e.g., based on
macroeconomic indicators)
Ideally, all estimates are independent of each other
Adapted from Global Intelligence Alliance, 2012

24. Estimating the Diaper Market
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Estimating the Diaper Market
300M (estimated)
80 years (estimated)
300M ÷ 80 = 4M (approx.)
Total U.S. population (all ages)
Average life expectancy
Population per each 1-year age group
Adapted from L.E.K. Consulting, 2013.

25. Diaper utilization rate Total # diapers used per day per segment
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Diaper market by age
300M (estimated)
80 years (estimated)
300M ÷ 80 = 4M (approx.)
Total U.S. population (all ages)
Average life expectancy
Population per each 1-year age group
Segments
# of 1-yr age groups
Pop per
1-yr age group
Pop per segment
Diaper utilization rate
Diapers used per day
Total # diapers used per day per segment
Infant, 0-1 years 1
x 4M
= 4M
100% 7
= 28M
Toddler,
1-2 years
2-3 years
Child, 3-5 years
Adult,
5-74 years
Senior, years

26. Diaper market by age (cont’d)
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Diaper market by age (cont’d)
300M (estimated)
80 years (estimated)
300M ÷ 80 = 4M (approx.)
Total U.S. population (all ages)
Average life expectancy
Population per each 1-year age group
Segments
# of 1-yr age groups
Pop per
1 year age group
Pop per segment
Diaper utilization rate
Diapers used per day
Total # of diapers used per day per segment
Infant, 0-1 years 1
x 4M
= 4M
100% 7
= 28M
Toddler,
1-2 years 6
= 26M
2-3 years
80% 5
= 20M
Child, 3-5 years 2
= 8M
50% 3
= 16M
Adult,
5-74 years 69
= 276M
15%
= 124.2M
Senior, years
40%
= 40M

27. Diaper Market, Dollar Value
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Diaper Market, Dollar Value
Segments
Total # of diapers used per day per segment
# days per year
Total # of diapers used per year per segment
Average revenue per diaper *
Total estimated revenue per segment
Infant, 0-1 years
28M
Toddler,
1-2 years
26M
2-3 years
20M
Child, 3-5 years
16M
Adult,
5-74 years
124.2M
Senior, years
40M
TOTAL
254.2
*Average revenue per diaper will vary on segment, quantity sold, material employed, brand premium and if end-market is retail or wholesale.

28. Diaper Market, Dollar Value (cont’d)
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Diaper Market, Dollar Value (cont’d)
Segments
Total # of diapers used per day per segment
# days per year
Total # of diapers used per year per segment
Average revenue per diaper *
Total estimated revenue per segment
Infant, 0-1 years
28M
x 365
= 10.2B
0.14
= $1.4B
Toddler,
1-2 years
26M
2-3 years
20M
Child, 3-5 years
16M
Adult,
5-74 years
124.2M
Senior, years
40M
TOTAL
254.2
*Average cost per diaper will vary on segment, quantity sold, material employed, brand premium and if end-market is retail or wholesale.

29. Diaper Market, Dollar Value (cont’d)
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Diaper Market, Dollar Value (cont’d)
Segments
Total # of diapers used per day per segment
# days per year
Total # of diapers used per year per segment
Average revenue per diaper *
Total estimated revenue per segment
Infant, 0-1 years
28M
x 365
= 10.2B
0.14
= $1.4B
Toddler,
1-2 years
26M
= 9.5B
= $1.3B
2-3 years
20M
= 7.3B
= $1.0B
Child, 3-5 years
16M
= 5.8B
= $812M
Adult,
5-74 years
124.2M
= 45.3B
= $6.3B
Senior, years
40M
X 365
= 24.6B
= $3.4B
TOTAL
254.2
= 102.7B
= $15B
*Average cost per diaper will vary on segment, quantity sold, material employed, brand premium and if end-market is retail or wholesale.

30. Estimation Modeling in 5 Steps
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Estimation Modeling in 5 Steps
Brainstorm and map out possible inputs, outputs & calculations
Fill in data you currently have
Identify data gaps
Plan how to source and fill in data gaps
Compare estimates as result of different models
Adapted from Global Intelligence Alliance, 2012

31. Framework: Three Aspects to Market Sizing
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SEGMENTS
ESTIMATION MODEL
DATA SOURCES
Framework: Three Aspects to Market Sizing

32. Sourcing the Data: Secondary
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Sourcing the Data: Secondary
Type of data
Example of source
Statistics
Economic statistics
Customs databases
Government statistics
Industry data
Industry associations
Market research reports
Investor reports
Product data
Product brochures
Product reviews
News
Free public aggregators (incl. Google)
Fee-based news aggregators
Financial data
Global company financials databases
Local company financials databases
Company data
Public company directories
Securities exchanges (S.E.C., SEDAR)
Adapted from Global Intelligence Alliance, 2012

33. Sourcing the Data: Resources
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Sourcing the Data: Resources
UofT Libraries
marketresearch.com (academic)
ISI Emerging Markets
Investext
Capital IQ
Factiva
etc.
Startup Library
MaRS Market Intelligence
comScore
eMarketer
Gartner
Forrester
GlobalData
HIMSS Analytics
etc.

34. Sourcing the Data: Primary
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Sourcing the Data: Primary
Data
Own Employees
Own supply-chain
Own customers
Industry experts
Analysts
Associations
Academia
Adapted from Global Intelligence Alliance, 2012

35. Sourcing the Data: Interviews
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Sourcing the Data: Interviews
Motivate respondents through information sharing
Trade information with each other
Present info based on secondary research and industry expertise
Have discussion at higher level
Adapted from Global Intelligence Alliance, 2012

36. Secondary to support primary
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Secondary to support primary
Customer Development
Problem interviews
Solutions interviews
WELCOME 2 min. Set the Stage
COLLECT DEMOGRAPHICS 2 min. Test Customer Development
TELL A STORY
2 min. Set Problem Context
PROBLEM RANKING
4 min. Test Problem
EXPLORE CUSTOMER’S WORLDVIEW
15 min. Test Problem
WRAPPING UP
2 min. The Hook and Ask
DOCUMENT RESULTS
5 min.
Source: Maurya, 2012.

37. Framework: Three Aspects to Market Sizing
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SEGMENTS
ESTIMATION MODEL
DATA SOURCES
Industry norms, decision-making context
Develop more than one model, compare estimates
Framework: Three Aspects to Market Sizing
Secondary + primary

38. A Note on Accuracy Methodologies estimates based on historical trends
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A Note on Accuracy
Transactional data
Statistical sampling
Surveys
Delphi method
Individual expert opinions
Heuristic assumptions
Methodologies estimates based on
historical trends
national statistics
surveys or interviews with executives, competitors, consumers, retailers
news coverage
Adapted from Global Intelligence Alliance, 2012

39. This slide deck has been made available under a creative commons license to reuse, remix, repurpose for non-commercial classroom uses, with source attribution.
Disclaimer
Common small print: “…best efforts in using information from sources believed to be reliable but no warranties on accuracy or completeness of information and not liable for errors, omissions…”

40. Image Credits & References
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Image Credits & References
Blank, S. & Dorf, B. (2012). Startup Owner’s Manual. K&S Ranch Press: Pescadero, CA.
American Apparel segmentation:
Euromonitor International. June Apparel in Canada.
Luxury brand segment definitions:
IBISWorld Industry Report Women’s & Children’s Apparel Wholesaling in the U.S. Caitlin Newsom, September 2013.
Board game market estimation model adapted from Gentschev, G. Brekiri Blog post.
Diaper market estimation exercise adapted from L.E.K. Consulting,
Maurya, A. (2012). Running Lean. 2nd Ed. O’Reilly: Sebastopol, CA.
Blank Cotton T-shirt, Open Cart:
Global Intelligence Alliance, Market Sizing and Forecasting.
Interviewer image. fakhar on Stock Xchange, Image ID: ,