How to Determine Market Size for a Business Plan
One of the most important components of a business plan is to determine market size. It helps to create understanding about the market potential and growth prospects of the business. Furthermore, it helps to know the characteristics and needs of the customers. In addition, it also provides assistance to determine the competition prevailing in the market. If you are looking forward to determine the market size of your business, then this post will help you.
Instructions
-
1
Determine your customers
First of all you have to determine your target market. It will include all the customers who intend to buy product or service which will be offered by your business. After determining your customers, you have to work on understanding their characteristics and the problems which they are facing with the current products and services in the market. If you will be able to note down the problems faced by the customers, you can start working to address that issue by providing them the products and services according to their needs. -
2
Categorise your customers
After determining your customers, you have to divide them into various groups depending upon their age, gender, income, education and other demographics. It will help you to focus on the specific needs and wants of a particular group of people. -
3
Study your customers
After categorising your customers into respective groups, you have to study the characteristics of each group of customers in detail. You can access the data provided in the national surveys and can take benefit from it to assess the habits of your customers. -
4
Understand your competitors
It is very important to understand the competition in the market which you can do by studying your competitors. What kind of products and services your competitors are offering, at what price and in what shape? You can find a room for improvement in the product and service of your competitor which can become your competitive edge in the market. Besides, you have to determine how much market has already been captured by the current players. You can surely find some room to make an entrance in the market with a different product or service (by offering something special to your customers which other competitors have not offered yet). -
5
Determine the market size
After determining your customers, their characteristics and the room to make an entrance in the market, you will be able to make a good estimate of your market size.
