COURSES
MBAData Science & AnalyticsDoctorate Software & Tech AI | ML MarketingManagement
Professional Certificate Programme in HR Management and AnalyticsPost Graduate Certificate in Product ManagementExecutive Post Graduate Program in Healthcare ManagementExecutive PG Programme in Human Resource ManagementMBA in International Finance (integrated with ACCA, UK)Global Master Certificate in Integrated Supply Chain ManagementAdvanced General Management ProgramManagement EssentialsLeadership and Management in New Age BusinessProduct Management Online Certificate ProgramStrategic Human Resources Leadership Cornell Certificate ProgramHuman Resources Management Certificate Program for Indian ExecutivesGlobal Professional Certificate in Effective Leadership and ManagementCSM® Certification TrainingCSPO® Certification TrainingLeading SAFe® 5.1 Training (SAFe® Agilist Certification)SAFe® 5.1 POPM CertificationSAFe® 5.1 Scrum Master Certification (SSM)Implementing SAFe® 5.1 with SPC CertificationSAFe® 5 Release Train Engineer (RTE) CertificationPMP® Certification TrainingPRINCE2® Foundation and Practitioner Certification
Law
Job Linked
Bootcamps
Study Abroad
MS in Data AnalyticsMS in Project ManagementMS in Information TechnologyMasters Degree in Data Analytics and VisualizationMasters Degree in Artificial IntelligenceMBS in Entrepreneurship and MarketingMSc in Data AnalyticsMS in Data AnalyticsMS in Computer ScienceMaster of Science in Business AnalyticsMaster of Business Administration MS in Data ScienceMS in Information TechnologyMaster of Business AdministrationMS in Applied Data ScienceMaster of Business Administration | STEMMS in Data AnalyticsM.Sc. Data Science (60 ECTS)Master of Business AdministrationMS in Information Technology and Administrative Management MS in Computer Science Master of Business Administration MBA General Management-90 ECTSMSc International Business ManagementMS Data Science Master of Business Administration MSc Business Intelligence and Data ScienceMS Data Analytics MS in Management Information SystemsMSc International Business and ManagementMS Engineering ManagementMS in Machine Learning EngineeringMS in Engineering ManagementMSc Data EngineeringMSc Artificial Intelligence EngineeringMPS in InformaticsMPS in Applied Machine IntelligenceMS in Project ManagementMPS in AnalyticsMS in Project ManagementMS in Organizational LeadershipMPS in Analytics - NEU CanadaMBA with specializationMPS in Informatics - NEU Canada Master in Business AdministrationMS in Digital Marketing and MediaMSc Sustainable Tourism and Event ManagementMSc in Circular Economy and Sustainable InnovationMSc in Impact Finance and Fintech ManagementMS Computer ScienceMS in Applied StatisticsMaster in Computer Information SystemsMBA in Technology, Innovation and EntrepreneurshipMSc Data Science with Work PlacementMSc Global Business Management with Work Placement MBA with Work PlacementMS in Robotics and Autonomous SystemsMS in Civil EngineeringMS in Internet of ThingsMSc International Logistics and Supply Chain ManagementMBA- Business InformaticsMSc International ManagementMBA in Strategic Data Driven ManagementMSc Digital MarketingMBA Business and MarketingMaster of Business AdministrationMSc in Sustainable Global Supply Chain ManagementMSc Digital Business Analytics MSc in International HospitalityMSc Luxury and Innovation ManagementMaster of Business Administration-International Business ManagementMS in Computer EngineeringMS in Industrial and Systems EngineeringMSc International Business ManagementMaster in ManagementMSc MarketingMSc Business ManagementMSc Global Supply Chain ManagementMS in Information Systems and Technology with Business Intelligence and Analytics ConcentrationMSc Corporate FinanceMSc Data Analytics for BusinessMaster of Business AdministrationMaster of Business AdministrationMaster of Business AdministrationMSc in International FinanceMSc in International Management and Global LeadershipMaster of Business AdministrationBachelor of BusinessMaster of Business Administration 60 ECTSMaster of Business Administration 90 ECTSMaster of Business Administration 90 ECTSBachelor of Business AnalyticsBachelor of Information TechnologyMaster of Business AdministrationMBA Business AnalyticsMSc in Marketing Analytics and Data IntelligenceMS Biotechnology Management and EntrepreneurshipMSc in Luxury and Fashion ManagementMaster of Business Administration (90 ECTS)Bachelor of Business Administration (180 ECTS)B.Sc. Computer Science (180 ECTS) MSc in International Corporate Finance MSc in Sustainable Luxury and Creative IndustriesMSc Digital Marketing
For College Students
  • Home
  • Learn
  • Market Size Estimation in Product Management - Detailed Study

Market Size Estimation in Product Management - Detailed Study

$$/$$

To develop a product strategy, you will need to learn about the overall market, your competition and your user.

Here, let's start with looking at the bigger picture by understanding about market sizing.

Let’s take an example to understand market sizing. Do you know who the king of Instagram is? Well, it’s Ronaldo (the person who has the most followers) if you didn’t know it already.

 

Now assume you are a product manager at Instagram. How will you find the person with maximum followers? Of course, by checking the number of followers they have.

 

What if Instagram doesn't show the number of followers? In that case, you will have to estimate it yourself. How would you approach this then? 

 

One way could be to take an estimation of the Instagram users in the world, then estimate the number of football lovers among them, and then, based on that, estimate Ronaldo’s fans.

 

The above method could be a possible approach to achieve your desired results.

Market Sizing: Example
$$/$$

In order to understand the market size, you need to know three terms: 

 

  1. Total available market (TAM): The overall population that presents a revenue opportunity for your product falls in this category.

  2. Serviceable available market (SAM): The portion of the markets, geographies, and/or other segments of the TAM that can be reached by your company or product.

  3. Target segment: Also known as the serviceable obtainable market (SOM), this category includes the realistic portion of the SAM that can be captured by your company or product.

You can determine the size of your market through two approaches:

 

  1. Top-down approach: From the entire market, you can determine the number of customers and the level of consumption to arrive at the target market.

  2. Bottom-up approach: You can estimate the potential sales for a single business in the market and arrive at the total sales figure from it:

    • The total sales figure that you arrive at with the bottom-up approach is the product of the number of potential customers in the market and the price of your product. Suppose you are the product manager of a B2B SaaS (Software as a service) product like Freshdesk. SaaS operates on a per-seat basis, which refers to the number of users who have access to the service. So, you would consider the number of seats rather than the number of customers. Suppose your software is priced at $20 per seat, and the number of potential seats in the market is 1,000; then the market size comes to $20,000. 

 

You need to understand the key parameters that determine your market size as this will enable you to target the segment most likely to respond to your product. 

$$/$$

Additional Reading

 

Now that you have learned about market sizing, you must be wondering about the other market factors that can have positive and negative impacts on a product. To understand this, let’s proceed to the next segment on market dynamics.

$$/$$

Market sizing is similar to this method. Knowing the size and potential of the market you cater to is a crucial part of identifying the factors that need to be addressed in the development process of your product.

 

Let’s deep dive into market sizing in the next video.