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 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

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