Target Market Sizing 🎯

Target Market Sizing is necessary for business and marketing planning, and budgeting for all startups, especially when seeking third-party financing.

What is Target Market Sizing?​

Target Market Sizing is key for business and marketing planning, and budgeting for all startups, especially when seeking third-party financing. A diligent preparation makes sure, that you go-to-market in the right niche.

Target Market Sizing quantifies the financial potential of your business in money terms or consumption units. Target Market Sizing helps you refine business model canvas hypotheses.

Why does Target Market Sizing matter?​

Expanding internationally comes with its own unique set of obstacles. Expect language and cultural barriers. You will have to understand the different ways people communicate. Different tax codes, business regulations, and packaging standards in different countries.

Discover User Groups and Reasons for Buying 2

Market Size Estimates

1. The Total Addressable Market

Total Addressable Market = Entire chain of buyer/seller relationships. Value of the relationships at the point of consumption.

We use two methods to determine the total addressable market. First, a top-down analysis relies on secondary market research such as market analysis reports to determine how many end-users meet your different characteristics. Then, bottom-up analysis to identify how many customers there are, as well as how many end-users each customer has.

2. The Served Addressable Market

Served Addressable Market = The part of the Total Addressable Market for which your business model’s value proposition is strongest. The served addressable market is more clearly defined as that market opportunity that exists within a firm’s existing core competencies and/or past performance. A firm most likely can only service markets that are core or directly adjacent to its current customer base.

3. The Target Market

Target Market = The part of the Served Addressable Market segment with the most direct path to success. A segment of people considered likely to buy a product or service. A target market consists of customers that share the same buying motives and often as well follow similar characteristics, such as age, location, income, and lifestyle, to which a business directs its marketing.