Advice from Freville on identifying your customers and sizing your market

1. Sizing your market
A realistic view
Greville Commins
Accelerating Technology Businesses

2. Not so easy to find the next big market
Most of today's killer applications did not exist
10 years ago
50+
killer
applications
28
killer
8 applications
5 killer
killer applications
applications
1985 1995 2005 2015
Source: Malcolm Penn, Future Horizons
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3. What is market sizing?
• Simply put
• Number of customers in the market
• State of market, mature, growing, decline - trends
• Customers disposable income/spend
• Flexibility of customers, switch suppliers? Loyalty?
• A prediction of Total Available Market revenue
• Other factors:-
• Demographic, Economic, cultural, Technological,
Regulatory, Natural
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4. Sizing your market
a realistic view
 Is it really possible!
To get a realistic, reliable, credible size?
 The only thing you can rely on is that your
forecast is probably wrong
The market decides how big it will be!
 So what CAN we do?
On a limited budget.....
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5. Where do we get our market forecast from?
 Talking to customers
 Own market research
 Analysing competition & alternatives
 Historical trends & patterns, life cycles
 Our own gut feel….
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6. Looking for the right market segment
Value of
Products
&
 Markets Services
within
Category
with little competition
where profit potential is high Locations, Regions, Populations of
Market
where you can gain market control
at the right point in their life cycle
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7. Choosing target Market Segments
Low Value
Value of
Products &
Services
within
Category
Target
segment
High Value
Locations, Regions, Populations of Market
Too Large Too Small
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8. Segments where your profit potential is high
 Where
• The Total Available Market (TAM) is big,
• You can define the number of customers
• The cost/time to acquire the customer(s) is
definable
• You can demonstrate demand for the product
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9. Markets at the right point in their life cycle
• At what stage is your chosen market?
Market
stage Growth Maturity &
saturation
Introduction
Decline
time
Geoffrey Moore: Crossing the Chasm
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10. Markets at the right point in their life cycle
 Is there more growth potential to come?
 Time (years) to reach 50Million?
• Radio = 38
• TV = 13
• Internet =4 Markets are changing
all the time
• iPod =3
• Facebook =2
The evolution of technology & The human race
www.youtube.com/watch?v=JcSzqm5Whwc
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11. You need to do some market research
 Ask/survey potential customers
 Announcements from potential competitors
 Run trials, tests, sampling
 Research the web, press articles
 Independent sources
 Use your own experience
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12. Getting accurate market numbers
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13. Getting accurate market numbers
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14. Market numbers don’t just make them up!
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15. Things you can assume
 The real value in freely available information is
hidden away and can be hard to find
 People (potential customers) don’t want to give
away their knowledge for free/easily
 Even when you pay for information it can be of
questionable value
 Everyone avoids customer surveys.....
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16. Talk to potential customers
 First establish why people should talk to you
 Form a discovery list of questions
You need to check/validate market
Collect over multiple sessions
Ensure you get meaningful data
 Consult key figures
Use “Cascade” Networking approach
Experienced people in the industry, academics, consultants.
Potential customers – get their feedback
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17. The “Lean” approach
 A faster way of initiating a business.
Get product into customers hands sooner
Product is what customer needs
 Also a good way of doing market research
Test the market, validate need
Gauge reactions, get feedback
Engage with potential customers, ask questions
Measure demand
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18. Interesting web sources
 Gather information from independent sources
industry pundits and influencers (articles, blogs, tweets)
analysts
market research companies
Trade show materials
government reports,
 www.gov.uk,
 www.official-documents.gov.uk
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19. Interesting web sources
 Announcements from key market players
Competitor/Customer web sites
 Investor relations pages
 Press releases/articles
 Google images
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20. Investor relations pages
 Publicly quoted, companies
must give shareholders insight
into the company’s activities.
 Inside their web sites
Look for investor relations
sections
where you will find
• Financial reports
• Future strategy
• Market forecasts
• Shareholder meeting presentations
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21. Finally
What’s the1st rule of Fight Club?
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22. What’s the1st rule of Fight Club?
 ….don’t talk about Fight Club
Don’t reveal your new idea when talking to potential
customers….
Instead: Verify your understanding of the problem
Do not reveal your unique business idea!
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23. Thank You
Greville Commins
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