It is not uncommon for mid-size companies to only have a vague idea of the size of the market for their products and services. Surely these companies grew because they found customers that liked what they had to offer, not because they knew how big the market was. So why should they care ?

Obviously, management and sales people can rely on their personal knowledge and back-of-the-envelope estimates, such as “we know how much turnover we make and we believe we have X% market share”. But everybody will have different figures in mind, and a consensus will rarely exist.

Truth be told, markets are often complex and cannot be reduced to a single number. A large variety of products are often sold, so there isn’t one market but multiple markets or submarkets. The situation can also vary profoundly by country, as customer requirements will typically differ, and each country will often be dominated by a different set of suppliers.

Companies who need more than a single figure will greatly benefit from a ‘multidimensional’ market model that provides the relevant granularity and the right level of details – details that should be useful to address the hard questions that management and shareholders are raising.

Time and again, we have witnessed the added value that these market sizing models bring to our clients:

• Challenging old truths, removing blind spots, and building consensus around a new truth.
• ‘Aha moments’ are also extremely common !
• Better articulating the various market segments (products and customers) that are actually addressed by the company
• A more realistic view of market share(s), and how large or small competitors are, and where their respective focus lies
• The identification of potential market segments or countries for growth
• Providing quantitative inputs for market-entry strategies and business planning
• An improved market awareness that can be useful in communication with investors and shareholders, often keen to discuss how the market is evolving.

Deep down, understanding the actual size of the market, its structure and players, is an „outside-in“ inspection and a humbling experience: understanding and accepting that even if the company didn’t exist, there would still be a market out there, whose needs would be satisfied by other companies.

So, is the company’s market share closer to 0% or closer to 100%? Better understanding the reality of one’s own market share also raise interesting issues, such as:  why don’t we have 100% market share after all? Why are many customers buying from our competitors and not from us? Are we happy to leave a large portion of the market to our competitors, and if not, what shall we do and where should we start?

Investaura has been building market sizing and analysis models for more than 25 years, both for product and service businesses.  We have recently completed an assignment for the design and development of a multi-product / multi-country market database for a manufacturer active in more than 100 countries worldwide.

The client found the results extremely interesting and useful. So why not you ? Feel free to contact pierre.lurin@investaura.de to discuss your personal needs.