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Sizing, Segmenting, and Forecasting Markets
 

Sizing, Segmenting, and Forecasting Markets

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Business is driven by accurately defining how many customers there will be for your product over time, how much they are willing to pay over time, and what will make them break their current habits to ...

Business is driven by accurately defining how many customers there will be for your product over time, how much they are willing to pay over time, and what will make them break their current habits to pay for your product. Then throw in a healthy dose of competition and the concept of “market windows.” Top-level requirements and persona prioritization are derived from these fundamental definitions.

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    Sizing, Segmenting, and Forecasting Markets Sizing, Segmenting, and Forecasting Markets Presentation Transcript

    • Sizing, Segmenting, and Forecasting Markets
      Paul Teich
      Business Strategy
    • Market research
      Quantitative – what, where, when
      Facts
      Ask people closed questions (yes/no, how many, what date, …)
      Qualitative – why, how
      Opinion, attitude
      Ask people open-ended questions
      Then ask to follow them around for good measure…
    • Quantitative
      Primary (do it yourself)
      Design survey to find out exactly what you need to know
      Compromise on subset that you can afford
      Secondary
      Someone else has already gathered some or all of the data you need as a product or service
      It’s probably less expensive than DIY
    • Quantitative Sources
      Ask people in your industry who they use
      Market analyst data sets and PR
      Competitor PR
      Governments
      Libraries
      Especially school libraries
      Like UT, for instance
    • Qualitative
      Expert opinion
      Ethnography
      Focus groups
      Talk to people
      No, really, find some people to talk to…
    • Qualitative Sources
      Ask people in your industry who they use
      Market analyst reports and press releases
      Charities
      Political action committees
    • Segmentation
      People (B2C)
      Demographic – population characteristics
      Behavioral – loyalty, purchase patterns
      Psychographic – personality, values, attitudes, interests, lifestyles
      Organizations (B2B)
      Firmographic – characteristics of orgs
    • Successful segmentation
      Segments are measurable
      Qualitative data can be economically collected
      Segments are substantial
      Market is usefully subdivided
      Homogeneity within each segment
      Constituents are enough alike that they behave as a flock (for key attributes)
      Heterogeneity between segments
      Flocks are different enough to tell apart
    • Market sizing
      TAM – Total Available Market
      How many potential customers are there?
      SAM – Served Available Market
      How many (of the total) are already buying a similar or competing product?
      SOM – Share of Market
      What % of the market does each product or competitor account for?
    • Market forecasting
      In order to forecast your market…
      …you must have a history
    • Historic time series
      More than two data points
      Buy or find secondary market data…
      It must be appropriate to your segmentation
      Ideally, history is >2x the timeframe you want to forecast
      5 year forecast implies 10 year history
      Look for patterns in historic data
      Yes, this is statistics + art
    • Insert your forecast here
      What are you forecasting?
      How far are you willing to go?
      History and forecast must look like a continuous time series
      No “miracle occurs here” jumps
      Humans are very good at pattern recognition, they will call BS if the curve looks wrong
    • Technology and product adoption
      Large body of existing knowledge and best practice
      But it’s mostly pay per view
      Start with Wikipedia
      “technology adoption lifecycle”
      “forecasting”
    • Thank You PCA Sponsors!