What is Market Size Analysis?

In this article, we offer our thoughts on market size analysis. Market size analysis is the process of estimating the demand for your product or service within a particular market. It’s an essential component of any strategic marketing planning.

Market size analysis allows you to understand the size of a market and in turn, enables you to evaluate the opportunities waiting for you. And subsequently, accurately plan your marketing approach and investments. Market size analysis allows you to assess the potential strengths and weaknesses of that marketplace and implement effective strategies to improve your competitive advantage.

Analysis should include a list of organisations you could consider as competitors in the market, assess how much market share they hold and determine why they are in that market in the first place. Is it the primary market these competitors work in? Analyse how much are they going to fight to maintain their slice of the pie.

1. Define the market you are talking about

Defining the target market is the first thing that you have to do before doing market size analysis. Determining the market provides more certainty for your team and a baseline for your research. Define what the market is, and importantly, what isn’t the market.

2. Split the market into segments

If it’s a huge market you are looking to move into, it’s crucial to look at each target each segment at a time separately. Addressing their needs and demands. You may not have any customers to start with, and that’s why it is essential that you ensure to have an understanding of these sub segments before you expand your business.

3. Competitors in the market?

Determine who are your top three competitors and spend time assessing on what basis you can compete with them. What are the competitors offering? Are they similar to or better than yours? And, are going to offer something different?

Are your competitors in this market making a profit? Is that profit something you can better, and is it sufficient to bother? Are they expanding or scaling down? And what do their customers think of them? How can you distinguish your company from your competitors? What is their competitive advantage – and what can you do about it?

Are the Competitors in this market maintaining or increasing their market share? Once they know you have entered the market, what are they doing to about you? Will they reduce their prices, create new advertising, try and buy you out, improve their offering to take your competitive advantage away? Does the market size analysis include indirect competitors and indeed secondary markets your offering could take advantage of?

4. How much of the market can you win?


A top-down analysis determines the total market potential and then estimates your own share in that market. This can help you develop strategies according to the market potential and can help you grow in the right direction.


While bottom-up analysis estimates potential sales to determine a total figure of sales, this analysis evaluates where your products can be sold, competitive products sales, and the slice of current sales. Such analysis usually gives much more accurate results.

However, every poorly written market research report will state that the subject’s market is valued at around £2 or 3 billion per year. It’s a sign of lazy research unless backed up with reasoning. When looking at a market’s size, you should be realistic about the ability of your product/service breaking into this market. It is easy to say that the market size is £2 billion and we can get 5% over the next five years.

5. It’s not just about size, its what you do with it

However, you must remember that entering a market depends on more than just market size and potential growth. You have to look at the barriers and incentives for entry. Market size analysis could also include profiles of distributors, transport issues, people and political issues and a more thorough understanding of how to market in that particular market. Any market intelligence provider should be expected to offer the ‘what’, but more importantly, the ‘how’ and ‘why’.

In conclusion

It’s very easy when entering a new market without analysing the competition and working out the actual size of the market open to you. Starting in a static market, you should be expected and be ready to face fierce competition.  Market size analysis will help you understand how the addressable market size could change and aid you to respond to trends positively.

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