Market Sizing Research for Financial Brands

What is Market Sizing?

One of the most crucial tasks of a marketer is to calculate the size of the market for company products, as well as the potential value of this market. Logica® works closely with clients in the financial industry and technology space to determine market sizing—the first step used when creating a marketing plan or sales strategy. The insights gathered help with strategic decisions about product development and future growth.

 

Market sizing efforts can range from high level and broad to very detailed, depending on the time, budget and available data and how sensitive a measure needed. Logica takes a hands-on approach to understanding your business, your objectives and budget to recommend an approach that will be right for you. Here are some of the market sizing basics.

 

 

The Key Metrics of Market Sizing

There are three key metrics that provide a useful framework at all stages of growth for a company. They are:

 

  1. Total Addressable Market (TAM): This represents people or companies who could be interested in acquiring the good or service. It represents the total market and the maximum potential revenue a company can generate with its product.

  2. Serviceable Available Market (SAM): This represents people or companies who are interested in acquiring the good or service; the proportion of the TAM that the company can serve with its product.

  3. Serviceable Obtainable Market (SOM): This represents the market share, the proportion of the SAM that the company can realistically capture.
 

 

Calculating TAM, SAM and SOM

To calculate the TAM, you may need data from sources like the U.S. census, the U.S. Bureau of Economic Analysis, Dun and Bradstreet, or Hoovers as well as industry data from other public and non-public sources. To calculate the SAM and SOM, it is best to have proprietary data by conducting a study among your target audience to help refine your ideal customer and estimate the purchase intent of your product.  This is where Logica can help you save your team time and money by leveraging our expertise and taking this effort off of your plate so you can focus on what you do best.  Logica will design and execute the research, which includes the sample design, sourcing the sample, the survey tool development, and the analysis and reporting.

 

There are several ways to calculate the TAM, SAM and SOM, the most used are:

  • A top-down approach: Using macro-level data and then applying conditions or filters to that data to refine the target market and estimated market share.

  • Bottom-up approach: Using client data and survey data and then extrapolating to the broader market.
 

 

Logica’s Recommended Approach to Market Sizing

Logica works in partnership with clients to design the best research study to get the information needed for market sizing. Each company’s data needs are unique. Working together to identify the best target audience and understand the product concept and feature needs among that audience to ensure the right insights are gathered to feed into the market sizing calculation. Our recommended approach is to:

 

  • Use a bottom-up approach using the data from the research study (profile of target customer, interest in the product, likelihood to purchase), and from your customer data and overlay secondary data (census, industry data). Our team statisticians would then run statistical methods to calculate the market size and growth estimates.

  • Use a top-down approach (starting with the industry data) to validate the data from the bottom-up approach.

This robust methodology provides data-driven estimates that can be relied upon as the basis for strategic planning and further marketing work.

 

Market Sizing Use Case

A leading technology brand with a newly launched product needs to more deeply understand the market size for this product in its target B2B segment. Although the product is already in market, the company needs to identify which B2B verticals to prioritize for sales, marketing and the product roadmap. Given time and budget constraints, Logica presents three different potential market sizing options that leverage survey data and secondary data. Logica’s statisticians create models to identify the market size and potential that are unique to each of the very different verticals and potential use cases within those verticals. As a result of the research and analyses, the client is able to prioritize several verticals, know how to reach customers in those verticals, and know which product features to focus on for development.

 

Understanding Market Sizing for Financial Brands

Want to learn more about how Logica Research approaches market sizing research? How to best build a survey to provide missing information to help calculate your product’s potential market? Or determine post-launch where to focus marketing energy? Please contact us! 

 

 

 

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