Sizing the market and marketcrafting

Market size is the denominator of market share. Without a defensible estimate, managers cannot judge competitive position reliably or use portfolio tools such as the Growth/Share Matrix with confidence.

When to use it

Use marketcrafting or another market-sizing method when no adequate third-party estimate exists and the organisation must construct a market view from primary evidence and informed assumptions.

Origins

Market sizing combines longstanding top-down and bottom-up research practices. Marketcrafting is the competitor-based version described here: it was developed in consulting work for niche and under-researched markets where managers knew the customers and competitors well but lacked a dependable estimate of total demand.

What it is

Size matters because share, growth and competitive movement all depend on the boundary and scale of the market being measured.

Large companies and mainstream industries are more likely to attract trade associations and commercial research firms that publish regular market data. Smaller organisations and specialist segments often receive less attention. Occasionally, a business with turnover of £10–20 million will have monthly data covering itself and a handful of rivals, perhaps supplied by an entrepreneurial independent researcher. Most small and medium-sized enterprises do not.

Even a company with £100 million in revenue may find that published reports cover its principal activities but omit a promising £10 million segment with only two serious competitors and growth of 15 per cent a year. Such a niche can be too small to offer a commercial research provider enough subscribers. When no suitable market estimate is available, management must build one.

How to use it