Download market size

IMPACT GUIDE (UNIT 10)
UNIT OVERVIEW
Now that you have discovered your venture’s problem, solution, and customers,
you will identify your market. Market is how the exchange of goods and services
takes place and is a result of buyers and sellers being in contact with one
another, either directly or through mediating agents or institutions.
LEARNING OBJECTIVES
Students will:
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Know how to research the market
Differentiate between primary and secondary research tools
Define “market” and recognize its influence
VOCABULARY
Market: A means by which the exchange of goods and services takes place as a
result of buyers and sellers being in contact with one another, either directly or
through mediating agents or institutions.
Market Type: A classification system to determine the dynamics within a
particular market
Existing Market: An existing market exists. It has customers, competitors, there are
products serving the market and you can measure the size of the opportunity
(number of current customers, total revenue, growth rate, etc.)
Resegmented Market: A resegmented market seeks to fill the needs of a specific
niche because of better understanding of the needs.
New Market: A new market has no customers, no competitors, there are no
products currently serving the market and you cannot measure the size of the
opportunity.
Clone Market: A clone market is where entrepreneurs in one area copy an
existing market, i.e., a successful business model, from another area.
Niche: A niche is a focused, targetable portion of a market; a narrowly defined
group of customers.
Incumbent: One that already occupies a particular space.
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Market Size: The number of individuals in a certain market who are potential
buyers and/or sellers of a product or service. Companies are interested in
knowing the market size before launching a new product or service in an area.
Total Addressable Market: The total market if a company had a monopoly (and
everyone received the good/service) or 100% market share.
Served Available Market: The market that can be actually served.
Target Market: The market of most likely buyers and early adopters that you will
actually be able to serve.
Top Down Market Sizing: This is calculated by determining the total market, then
estimating your share of that market.
Bottom Up Market Sizing: Analysis is calculated by estimating potential sales in
order to determine a total sales figure
Market Growth: An increase in the number of people who buy a particular
product or service, or the number of products, etc. that are sold.
Capital: Financial assets, or the financial value of assets, such as cash.
Extrapolate: To project, expand, or extend known data or experience into an
unknown area to have a projected knowledge of that area.
Triangulate: Divide (an area) into triangles for surveying purposes.
Analogous: Comparable in certain respects, typically in a way that makes
clearer the nature of the things compared.
Penetration: The ability to enter a market.
Discretionary Income: Income remaining after deduction of taxes, other
mandatory charges, and expenditure on necessary items.
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MODULE 10.0: MARKET LANDSCAPE
VOCABULARY
Market: A means by which the exchange of goods and services takes place as a
result of buyers and sellers being in contact with one another, either directly or
through mediating agents or institutions.
Market Type: A classification system to determine the dynamics within a
particular market
Existing Market: An existing market exists. It has customers, competitors, there are
products serving the market and you can measure the size of the opportunity
(number of current customers, total revenue, growth rate, etc.)
Resegmented Market: A resegmented market seeks to fill the needs of a specific
niche because of better understanding of the needs.
New Market: A new market has no customers, no competitors, there are no
products currently serving the market and you cannot measure the size of the
opportunity.
Clone Market: A clone market is where entrepreneurs in one area copy an
existing market, i.e., a successful business model, from another area.
Niche: A niche is a focused, targetable portion of a market; a narrowly defined
group of customers.
Incumbent: One that already occupies a particular space.
DELIVERABLES
Market Type identification
Size of TAM/SAM/Target
Past and future market trends
BELL RINGER
Watch Yard Hop’s pitch: https://vimeo.com/153159282
Consider: What makes Yard Hop different from their competitors? Why is that an
advantage for them?
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INSTRUCTION
This section is an overview of market types, how to properly size a market, and
how to understand market trends. This section is heavily influenced by research
and analysis.
1. How many separate sources should you research when looking at your
market? Why?
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2. What are the four main market types?
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3. Existing Market:
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4. Who are the incumbents and which ones drive the market?
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5. What performance attributes have customers said are important?
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6. How do competitors define performance?
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7. Does this influence your venture? How?
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8. Resegmented Market:
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9. Questions to consider when identifying the market type:
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10. New Market:
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11. Questions to ask to determine if the market is new:
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12. Clone Market:
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13. What defines a clone market?
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14. Formulate a hypothesis: Which market best fits your venture? Why?
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15. Identify an example of a company in each market type and explain why
they fit in that market. Draw on your past research of companies or those
you’ve heard about in this class.
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Existing Market:
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Resegmented Market:
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New Market:
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Clone Market:
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MODULE 10.1: MARKET SIZE
VOCABULARY
Market Size: The number of individuals in a certain market who are potential
buyers and/or sellers of a product or service. Companies are interested in
knowing the market size before launching a new product or service in an area.
Total Addressable Market: The total market if a company had a monopoly (and
everyone received the good/service) or 100% market share.
Served Available Market: The market that can be actually served.
Target Market: The market of most likely buyers and early adopters that you will
actually be able to serve.
Top Down Market Sizing: This is calculated by determining the total market, then
estimating your share of that market.
Bottom Up Market Sizing: Analysis is calculated by estimating potential sales in
order to determine a total sales figure
Market Growth: An increase in the number of people who buy a particular
product or service, or the number of products, etc. that are sold.
Capital: Financial assets, or the financial value of assets, such as cash.
Extrapolate: To project, expand, or extend known data or experience into an
unknown area to have a projected knowledge of that area.
Triangulate: Divide (an area) into triangles for surveying purposes.
Analogous: Comparable in certain respects, typically in a way that makes
clearer the nature of the things compared.
Penetration: The ability to enter a market.
Discretionary Income: Income remaining after deduction of taxes, other
mandatory charges, and expenditure on necessary items.
BELL RINGER
Check out this image;
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Consider the highlighted section. In your own words, what do you think TAM
means? Can you think of an example of TAM?
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INSTRUCTION
Module 10.1 – Market Size
1. What is market sizing? Why does it matter?
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2. What is the Total Addressable Market (TAM)?
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3. What is the Total Addressable Market (TAM) in this example? How can you
reach this number?
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4. What is the Served Available Market (SAM)?
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5. What is the Served Available Market (SAM) in this example? How can you
reach this number?
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6. What is the Target Market?
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7. What is Target Market in this example? How can you reach this number?
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8. Why is it important to know these for your venture?
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9. What are some tips to finding TAM and SAM?
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10. What is the best way for your venture to find your TAM?
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11. Should you take a bottom up approach or a top up approach? Why?
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12. What are market trends? What changes them?
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13. What is market growth?
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14. Why is it likely that, when discretionary spending increases, specialty
coffee consumption will also increase?
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15. Where can you find the data you need to help identify your market?
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16. What three sources do you plan to use? Why?
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17. As a venture team you need to identify your TAM/SAM/Target market. You
should also include what kind of market you are in, as well as past and
future market trends.
Data Resources:
Google
Local Libraries
Universities
Statistics:
• Central Banks, World Bank, IMF
• Census
Competitive Intelligence
• Public disclosures by companies
• Pretending to be doing research as a student, contacting the
company
• Observing the company (ex: counting the number of customers at
a restaurant for 1 hr X the average price on the menu X hours open
in a day)
Market Research
• Individual interviews
• Focus groups
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• Surveys
Industry and Market Information
• Plunkett – industry data, market trends and forecasts
• Frost and Sullivan – Very industry specific information
• Euromonitor – Great for information on consumer market sizing and
information on brands
• Gartner – Great for technology markets
• Gale Directory Library – provides industry statistics and a directory
of nonprofit organizations and associations
Academic Journals
• Academic Search Complete
• RefWorks
• PubMed
• MarketResearch.com Academic
• Market Research Monitor
• Business Source Complete
• eMarketer
• IBISWorld
Traditional News Sources
• LexisNexis Academic
• Major Newspapers
• Google News
Government Resources
• US Census Bureau (www.census.org)
• Small Business Administration (www.sba.gov)
• Bureau of Econ Analysis (economicindicators.gov)
Digital Startup New Sources
• Venturebeat.com
• TechCrunch.com
• Mashable.com
• Fastcompany.com
• AZTechBeat.com
DELIVERABLES
Conduct a market analysis to present to class.
Create a 2-3 minute powerpoint presentation on your venture’s market.
The presentation must include:
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The Total Addressable Market
The Serviceable Market
The Target Market using bottom-up sizing
An estimated growth rate of the market or an analogous market
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APPENDIX: RESOURCES
The following links can be used to access the resources referenced throughout
the Impact Guide.
LINKS
10.0
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Markets: http://blogs.wsj.com/accelerators/2012/12/04/4-types-ofmarkets-4-ways-to-gauge-them/
10.1
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Bottom Up versus Top Down: http://www.inc.com/jeff-haden/bottom-upor-top-down-market-analysis-which-should-you-use.html
VIDEOS
N/A
BELL RINGERS
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10.0: Yard Hop’s pitch: https://vimeo.com/153159282
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