target-market, market-researchI am trying to figure out a way to get a quick handle on the size of a market for a potential product idea I have. That is, out of all the people this product would apply to, how many will probably buy it?
Surely there is a general ratio?
So, first up, the market size. What I have at the moment is: Reduce all the people in the world to all software developers. Then, all developers who develop mobile apps. There is another level below this which I will not mention as it is relative to my idea. Let’s just call it x.
Let’s say I have x number of people/companies that my product applies to. How many of these people could I estimate would actually buy this product? and over how many years would it take to get this number of sales, and growth at what annual rate? I’m talking really rough numbers here.
Where does one start?
If you have a software tool that has tangible value and the developer community at large would find it useful. How many sales would you make each year in say, the first 5 years?
UPDATE: [In response to JeremyParsons]
I completely agree with Jeremy. I’m talking in really practical terms here. I don’t follow the % of huge market concept. I am aware there is no simple answer to this question, but, at the same time. Some effort must be put in to try and get some kind of handle on what your possible market is. I am looking for feedback from others in order to have some guidelines to work against.
What you’re asking is known as market opportunity analysis or just market sizing, which generally involves determining your TAM > SAM > SOM. A bit of reading from the great Google:
To get real numbers for this (especially SOM, the final one), you have to ‘get out of the building’ and talk to/interview people in your target market - lots of people.
It might involve putting together and running a test ad campaign, or A/B tests on landing pages to get realistic conversion rates.
Only then will you have hard numbers that you can stand behind (and plan around).
If you are in an area with an active developer community, go to a mobile developer user group meeting and ask the organizer to anonymously announce the availability of your product and its price.
Anonymous so that you filter out the friend effect. Include the price to filter out the stingy programmer effect (we are cheap!). If anyone out of a reasonably sized room actually approaches the organizer for more info on your product.
You’ve got a winner.
In which case, offer to buy pizza and soda for then next meeting.
Also, as opposed to mapping out your market, so you can count your as-of-yet unrealized riches, why not make a small, targeted investment in marketing your product, today. Let the results of that marketing dictate your next move.
Explore your product’s potential, not like a god from on high, but instead, like a child exploring a dark room with a penlight.
Take small steps and let your early marketing illuminate in reality what statistical analysis, isolated from actual investment, could only imply.
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