What is market sizing?

What are its various

techniques and methodologies used in market
sizing? Explain with example.
Market means a companies looking to launch a new product or services.

Sizing means potential size of a market.

Market sizing may be defined as the process of estimating the potential of the
market.

Whenever the companies enter the new market or tries to expand themselves in
the existing market , so before launching a new product in the market one must
keep the following updates-:

 Total size of the market.

 Their major competitors.
 Customer needs and necessities.
 Availability of the products and services in the market.
 Latest trends or techniques followed by the market.
 Satisfying the customers.

There are four magical approach for market sizing

 Clarify the question
 Break down the problems
 Solve each piece
 Consolidate into a final result
Few steps required during the market sizing-:
 Defining the market
 Determining your approach
 Selecting sources
 Data structuring
 Data analysis
 There are two basic methodologies for determining market size-:
 Top-down
 Bottom-up

Top-down –
 Uses a broad market size figure
 Analyst data to start with a large market estimate
 Cut the market size down to TAM by making key
 assumptions.
 It is typically a quicker , more time efficient approach

For example- to determine the TAM for food packaging, you might start
with retail sales of packed food and multiply by an assumed packaging
cost(eg 10% of the total retail food value is packaging cost.)
Bottom-up-
 Starts with potential number of customers and work up from there
 Users- frequency of usage- transaction price
 It is more accurate, takes more time to complete

Using the above example of food packaging, a researcher might total the
food packaging sales of packaging producers – all food packaging or by
package type.