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Understanding the size of the market is key to commercial success

You have a new product or technology idea. For simplicity’s sake, let’s call it a solution. You’re probably wondering: “Where’s the most logical starting point for determining if a market exists for my solution, and how big might that market be?”

This is a classic market sizing question.

Finding the answer can be a daunting task, especially if your solution could be used across multiple industries. The challenge is compounded further by the presence of multiple segments within those industries. A rigorous analysis of all the industries and segments could take months, possibly even years, and it becomes essential that the research methods used are highly efficient.

Identifying efficiencies begins with a good understanding of your solution’s value proposition. This will help focus and narrow the scope of your study. For instance, ask yourself: “What are the unique selling features and benefits that differentiate my solution from those of my competitors?” Once you have identified the industries you want to pursue, it becomes important to single out those segments that are most likely to benefit from your solution, and your solution’s ability to meet an important, unmet need.

You may want to consider using the North American Industrial Classification System (NAICS), once known as the Standard Industrial Classification (SIC), to break the market up into more targeted segments. Industries (e.g. manufacturing), and sub classifications/segments (e.g. apparel, chemical, machinery etc.) are listed (go to Extensive statistics based on the Economic Census, such as sales, shipments and number of employees, are available for NAICS industries and segments (

Having identified the critical segments, you need to prioritize them. This is achieved through the use of screening criteria, which may include strategy requirements/constraints, segment size, unit sales, margins, etc. For example, manufacturing companies can be categorized based on employee size.

Through qualitative research, you can identify where and how your solution can be used within each segment. Start with your highest priority segments. Quantitative research can then help verify the solution’s value within those segments and the portion of the segments that really care about your solution (i.e. the market size).

Getting a fact-based understanding of market size is crucial for understanding the potential of your solution. Too many companies have invested extensive resources in launching a solution, only to find a market does not exist.

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