Estimating a market size should be done in the knowledge that it is often just that … an estimate! It is highly unlikely that an exact figure with which everyone agrees will be found and making a decision on how best to arrive at a final outcome will depend on several factors including:
- the relative size of the investment being made
- the requirement for a broad market view vs. a deep-dive assessment
- the need for trend data (past and future)
- whether strategic actions are to be taken as a result
Knowing that we are making an estimate or assessment of market size, we should make our calculations in different ways to enable validation and cross-checking of results.
There are three main methods of calculating market size: