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“Calculating market size” simply means looking at the number of people who might buy your product or service in a particular market, and the total revenue those sales could generate. 

“So what?” we hear you cry. Well, with the right survey data, market sizing can steer advertising and marketing campaigns to make sure the right message reaches the right people at the right time and in the right way – something that’s more important than ever in these uncertain times. 

As so often with GWI, it’s about bringing a big dollop of objectivity so you can make strategic decisions based on insight rather than instinct. 

In this blog we’ll take a good look at this important topic, including how to calculate market size. Sound good? Then let’s go.

The case for market sizing

As we suggested above, market sizing is ultimately about gauging the potential of a particular market – information that’s pure gold for both new brands aiming to launch in a particular space, and established brands looking to change tack or expand into new markets. 

Looking a little deeper, we see four key reasons why calculating market size is a must-do activity for marketers:

Expanding into new markets

“Look before you leap” is always good advice. If your brand’s looking to enter into a new space – say a new international market or a new sector – then knowing how to calculate market size is about the most important skill imaginable. 

Without it you’re essentially blundering into the unknown and hoping for the best – never a reassuring prospect. But with the right market size information at your fingertips you can get the lay of the land and make informed decisions that help de-risk the whole project – and who doesn’t want that?

Launching new products and services

You’ve heard the line, “If you build it they will come”. If only. 

In reality there are no guarantees about anything, and the history of brands is littered with examples of apparently great ideas falling flat when they entered the cold, hard world of the market. The brutal truth is, just because something seems like a good idea doesn’t mean it actually is. 

The solution, of course, is testing.

Firstly to gauge your idea’s potential for success, and secondly to refine everything so your product or service is as appealing as humanly possible. 

And testing starts with a detailed picture of your prospects – who they are, what they want, where they’re located and how to reach them. Identifying a small but representative group you can use as a sample to text products, services or marketing means you can iron out any kinks before you commit to major investment.

Optimizing campaign spend 

John Wannaker, 19th-century US business giant and father of the modern department store, famously said, “Half the money I spend on advertising is wasted, unfortunately I don’t know which half.” 

That was then; thankfully things have moved on and today there are proven ways to measure the effectiveness of your advertising, starting with gathering as much information on your potential market as possible. Simply knowing how to calculate market size is a hugely important piece of information, and a vital part of optimizing campaign spend.

Attracting partners and investment

Knowing the value of your market makes it easy for other organizations to see the value in your business – essential stuff when it comes to partnerships and investment. 

By digging into the numbers you can vividly demonstrate your market size and expected profits per sale. In turn you can predict likely ROI with unprecedented accuracy, so everyone involved can see the true scale of the opportunity.

Top down vs. bottom up

There are two broad approaches to calculating market sizing: top-down (focusing on the supply side) and bottom-up (focusing on the demand side).

The top-down approach sounds attractive but don’t be fooled, it’s likely to produce inaccurate results. You look at the size of the market for your product or service then use simple arithmetic to see how much that market could be worth to you. 

Let’s say you sell a digital service aimed at manufacturers – you simply multiply the number of relevant manufacturers with the likely average size of sale. 

Clearly that ignores a host of possible objections; not every manufacturer will want your services, and even those who do won’t necessarily spend the average amount. In short, a top-down approach that focuses on supply will almost certainly lead to wildly optimistic figures.

The solution? Reverse this approach and calculate your market size from the bottom up by looking at realistic demand. 

To do that you almost certainly need the help of professional market researchers, but the result will be accurate and realistic. 

You won’t be surprised to hear it’s this approach we very strongly recommend. 

After all, what’s the point of analysis that, while simple enough to produce, is just plain wrong? If you were to use this to decide strategy the result could be disappointing or even disastrous. No, however you look at it, bottom up is the way to go.

And having decided that, let’s look at how to accurately calculate market size.

Calculating market sizing: how it’s done

Having established that market sizing matters, let’s look at how to calculate market size using survey data.

1. Use the resources at hand.

If you’re not exactly sure who your audience are, looking at your competitors is a great place to start.

There are plenty of reports and resources you can use to identify and understand your audience. Useful sources to have at your fingertips include: 

2. Define your target market.

The next step is to add detail to make sure your brand aligns with consumer demand. 

Using GWI’s global market survey data means you can accurately segment and profile your audiences by demographics, behaviors, lifestyles, and motivations.

Our objective, structured, weighted data is representative of a known universe and helps qualify other valuable but less structured sources such as social listening.

Combining large sample sizes with a wide range of defining variables offers greatest possible accuracy. With tens of thousands of data points at your command you can create a pin-sharp picture of the people who’ll engage with your brand and ultimately buy whatever you’re selling, by both region and sector. 

The point is that taking the time to build a detailed picture of your audience is the basis of successful market sizing analysis, so the more thorough your research at this stage, the more accurate and useful your audience profiling will ultimately be.

3. Uncover the wider numbers.

Having identified your audience, it’s time to quantify them.  

One of the biggest benefits of market sizing based on survey data is an instant estimate of how many audience members exist in a particular market. 

If your data set is detailed enough you can apply your audience segments against either the whole population or a specific area. For example, using GWI you can create an audience and instantly see how many people it represents in the real world, building reliable numbers into your planning.

4. Take market sizing a step further.

Commissioning custom survey data gives you total control over the questions you put to your audience. This is a particularly effective way to identify your niche, understand their demographics, and ask about their specific interests, motivations and perceptions.

The power of custom survey data means it’s worth spending a moment looking at exactly how it works. 

Survey data in action

Imagine an established Brazillian coffee brand selling beans and pods direct–to-consumer online. Already successful in their home market, they’re now looking to expand out of South America into new regions.

The company wants to carry out research into the market potential of each region, specifically which nations have the highest demand for coffee beans and pods. Here’s how they go about it.

Putting numbers behind assumptions

The brand uses survey data to identify 380,600 respondents globally who say they’ve purchased coffee in the last month. Next they segment these consumers by region.

Using the universe weighting, the survey data expands the sample of coffee drinkers in each region to give an estimate of the number of people who bought coffee, for example: 

  • 160m people in China (14.6% of the population)
  • 108m in the USA (10%)
  • 88m in India (12%)
  • 52m in Indonesia (5%)

Clearly China has the highest number of regular coffee buyers, with the U.S., India and Indonesia also showing potential. 

Having identified coffee’s overall popularity by region, the brand then assesses the costs of setting up a business in each of the countries. As a result they identify India as their prime opportunity.

Getting a true view of demand

Now they need to make sure there’s demand for buying coffee online in India. 

Again using the universe weighting, they find that 26.3m consumers in India have bought coffee online in the last month, and they’re 12% more likely than the average online consumer to do so.

That’s good news, but what they really need to know is the potential demand for Brazillian coffee rather than any other type.

They decide to commission a custom survey into the preferences of coffee drinkers in India. They discover the most popular types are: 

  • Colombian (25%)
  • Brazilian (22%)
  • Ethiopian (10%)
  • Kenyan (5%) 

That’s pretty encouraging, with Brazilian coffee only a few points behind Colombian. The custom survey also revealed the most popular brands in the region, current consumer spend, consumer loyalty and their openness to switch brands.

Put all this together, and market sizing analysis and custom survey questions enable our fictional coffee company to accurately gauge the size of the opportunity for selling Brazillian coffee in India. It also suggests that adding Colombian and Ethiopian coffees to their range would widen their potential market further. 

Case study: signing a global partner with market sizing

Blizzard Entertainment is a leading entertainment software developer and one of the most popular and well-respected makers of computer games. 

Commercialization is at the very top of their agenda, based largely on creating effective partnerships. To drive this, the brand needs to craft compelling, data-rich narratives that show how Blizzard and its esports audience are worthy of investment.

The challenge: a lack of global insight

When an opportunity arose with a leading U.S.-based snack brand, Blizzard’s sales team needed to prove their esports audience had an interest in buying the snack.

To do that they needed a story that stood out and was supported by hard data. The difficulty was their existing understanding was missing the vital global view.

The action: revealing the market potential

Blizzard set to work leveraging GWI data to show how esports fans across key markets really felt about the snack brand in question.

Here’s what they did: 

As Alan Lan, Strategy & Analytics Manager for AB Esports at Blizzard, puts it, “The data on purchase intent and consideration was especially valuable. It proved we weren’t making assumptions and that our recommendations were based on fact.” 

The result: signing a global partner

Using GWI data, Blizzard were able to say exactly how many of their esport audience used the snack in each category, along with how this compared to their competitors and the overall market size.

The result showed the true market potential of the partnership, offering quantifiable proof to justify long-term investment.

As a result the snack brand signed a sponsorship deal for Blizzard’s prominent Overwatch League, followed by a multi-year partnership that opens the door to even more future growth.

Market sizing in a nutshell

Market size is the total number of potential customers within a particular market. Calculating it starts with understanding these customers – the so-called bottom up approach – hence the importance of market research. 

Market sizing helps new and expanding businesses to: 

  • Get a broad understanding of their audience and market trends based on up-to-the-minute data. 
  • Assess the demand for a product or service, both in general and in the light of events like the arrival of COVID.
  • Understand audiences in detail, so brands know exactly who to target, which channels to use, and who to ignore. 
  • Use a data source that provides instant, authoritative answers on audience numbers, both globally and in specific markets.
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