When to Investigate Market Size
In order to launch a successful new product, it’s imperative to approximate the potential sales opportunity and the size of the market that it will penetrate.
Doing so will help you shape and scale the approach that you take for the product launch, and will ensure that the product will be successfully embraced by the market.
While the existing market for your product offering might be comprised of a large number of people, it’s important to maintain the realistic perspective that the majority of the market will not immediately adopt and accept your offering.
Therefore, when you want to truly estimate a market, it is imperative to determine who in your potential addressable market will actually use your product based on what problem or need the product is solving, and how it fits into the potential addressable market.
Herein lies the difference between addressable market and the true target market size.
While planning to launch a new product offering, refine your target market by determining who, how, and why people in that market will use your product. This helps to size up your potential impact.
Surveys are an invaluable and extremely efficient research tool that can be used for estimating market size.
Best Practices for Using Surveys to Determine Market Size
There are numerous available methods that can be used to determine market size. However, online surveys are often the least expensive, and the most convenient. With surveys, you can simply ask people if they are interested in your product offering.
There are three best practices to always keep top of mind while using surveys to determine market size.
1. Quantitative data is more powerful than qualitative data.
While in certain circumstances qualitative data can provide more impactful insights than quantitative data, determining market size is not one of these circumstances.
When investigating and estimating market size, it’s best to ask people questions that will yield quantitative data. For example, you can ask binary, yes or no questions, and then adjust “yes” and “no” answers to hold different values.
You could also ask Likert Scale questions about behaviors, preferences, and emotions, and numerically score people’s answers in that manner.
The takeaway here is to avoid open ended questions, and stick to questions that will provide you with hard data and give you an impression of market size.
2. Thoroughly think through your questions prior to distributing your survey.
With any survey, it’s best to put careful and thorough consideration into the questions that you are asking respondents.
While you want to ensure that your survey is not too long and that your respondents don’t fall victim to survey fatigue, it’s also important to think through the types of questions that you are asking by running a simple litmus test: what kind of answer are you looking for?
Shape the wording and the question type from there
Surveys that hold the purpose of gathering data to inform market size estimation are optimal when they ask demographic and population segmentation questions.
These are the kinds of questions that will provide insight into information such as respondents’ gender, age, income, level of education, location of residency, and other key factors that go into determining your true target market size.
All of these factors ultimately influence purchasing decisions, so you’ll want to be very thorough while presenting demographic and segmentation questions to your respondents.
3. Do everything in your power to avoid leading questions.
This is one of our favorite best practices to follow regardless of the type of survey, however, it’s particularly relevant when your goal is to estimate market size from survey insights.
Leading questions are any questions that, by nature, persuade respondents to answer in one way or another.
For example, “Would you buy a home if it meant you could life forever?”
Since the majority of people are interested in living in a home that they own, and most people fear death, this question would be biased and respondents would be likely to answer “yes.”
If you’re looking for more information on best practices for eliminating survey or market research bias, and how to use logic in different question types here are some helpful articles:
- How to Use Logic to Eliminate Online Survey Bias
- 4 Ways to Eliminate Bias in Market Research
- Great Survey Design: Planning Your Survey
You are now armed with three best practices that should be kept in mind while using surveys to determine market size.
Can you think of any other best practices that should be added to this list? If so, feel free to leave a note in the comments below! We’d love to hear from you!