How to Find Market Size and Market Value

Market size info for small markets like New Zealand or niche products can be tricky to find. Sometimes, a best-efforts estimation is the only option. Here are some tips to help you if you need some market size or value data.

1. Define your market first, i.e. by geography, technology, demography, use or sector and stick to it.

2. Formulate how you will do your calculations. It should be a combination of desk research for any published information and primary analysis to back up any initial conclusions and for sense-making.

3. Only use reputable data from secondary research. Look carefully at how they have come to their conclusions and double check it. Does it make sense? Is the data they have measured fit with your market parameters?

4. When doing the desk research, pick up on any trend data that is coming up that will affect future market share, e.g. disruptors entering via new technology, changes in packaging needs, or trends in dietary preferences by customers. This information is valuable as an early-warning indicator of change in the market, allowing you to prepare.

5. Once you’ve got some market size/ value numbers, make sure that you carefully cite the source data. If you need to do this exercise again, it’s a big help to have the framework of past calculations to start from, and then you can tweak if necessary.

6. If statistical analysis isn’t your thing, then gather the data and get someone who knows how to forecast and model numbers.

7. Be transparent - tell people it’s a ‘best efforts’ result, but show how you got to the conclusion you have and what the parameters were. Market size/value is often an educated guess as people, and the choices they make are often very fluid and can change overnight.

New Product Development (NPD)

I’m always on the hunt for cool new apps, websites or tools that will help me work smarter. Have a look at Product Hunt. It’s a daily list of the best new products or new releases. The breath of what is being developed is just amazing and great to see what features developers are adding to their products. This could give you ideas about where to take your product or service, plus offers some great competitor research insights.

Price and Product Choice for Consumers

In 2015, New Zealand consumers were introduced to 13,984 new branded products. Nielsen found that only 64 (0.4%) had sales over $NZ1 million, with only 7 products being truly innovative new offerings. The rest were just line extensions. Manufacturers seem to be sticking to rather boring ways of growing their market share and in turn, reinforcing price sensitivity. However, smart, nimble small innovators have a chance to grab a slice of the market if they can look at changing demographics and target those with growing populations. Think Chinese, South Korean, Indian and Pacific Island peoples, as well as the growth in millennials and the over-50s.

Case Study: Market Scan for NPD

I've just completed a new product development (NPD) project for a team of New Zealanders who have a great idea for a device and app. The thing was, they needed a quick market scan done by someone impartial who doesn't have that emotional link to whether the idea is worth pursuing. Budget and time frames were tight too.

Here's what I found out:

• My clients need to narrow down who their target user is, as the type of device and app is determined by developmental needs, so targeted functionality is key. It also needs to survive the "coolness" test for the users and purchasers.

• The overseas market leader is taking steps to dictate what the materials and safety standards of these devices is going to be. This is a really smart move by this competitor - they are helping decide and drive this important concern of purchasers, plus set the standard. This gives them a lead time over others in the market, as well as positioning them as the device of choice.

• Crowdfunding for these devices is the primary source of money for product development and marketing overseas, with the funds raised ranging from US$300,000 to US$1.2 million. This gives my clients an indication of what is likely to be needed to get their product off the ground here.

• The main competitors are selling the products themselves via their engaging and slick websites, which use entertaining videos to sell. Social media marketing via word of mouth recommendations is absolutely critical for these potential purchasers. My client needs to understand how this type of marketing will need to be employed if they go to market.

• The initial shipments of competitor products have sold out, and the companies concerned are taking names for a waiting list for new shipments. This indicates that there is demand for this product and the type of functionality it offers, for a premium price.

This information is the reality that my clients now need to get their head around before they spend any more money and time. Better to know now, rather than later. Contact me (cathy@heath.co.nz) if you need a market scan.