Potential limits of market sizing
Market sizing is a powerful tool that can help you make better business decisions while you’re still in the planning phase. But, it’s not perfect, and it’s not a magic bullet. It’s just a way to increase the amount of information you have available to inform your business decisions.
It can help to look at some of the common limitations of this analytical process.
The first limitation has to do with your assumptions. At the end of the day, you don’t know how many people will buy your stuff, and you don’t know how much they will buy when they do make a purchase. You can only guess, and regardless of how hard you try, your guess will never be perfect.
Another limitation is something that impairs any attempt to predict the future. There are always complete unknowns that you can’t anticipate. Natural disasters can reshape your market in an instant. Unexpected legislation or regulations could change the rules of your industry.
The unexpected is vast, and market sizing can’t account for it at all.
Last, and most important, is that market sizing can breed overconfidence. It’s a way to gauge potential, not a guarantee.
When market sizing data looks promising, it can be easy to get overly optimistic, and that can lead to risky investment behavior. If you keep decisions grounded, though, market sizing is on your list of useful tools that can improve your business strategy.
Use market sizing for strategic business planning
As we know by now, market sizing is a crucial step in strategic business planning that involves estimating the potential market demand for a product or service.
It provides an understanding of the size and growth potential of the market, the competition, and the market share that a company can capture.
By using market sizing, businesses can identify growth opportunities, optimize pricing, develop marketing strategies, and make informed decisions about investments and resource allocation.
By following the key steps of market sizing, businesses can make informed decisions about their products, services, and overall business strategy. Incorporating market size data into your planning process can help you stay ahead of the competition and achieve long-term success.
If you haven’t been utilizing market sizing for your business strategy, it’s time to take a closer look, and Mailchimp can help. You’ll find a long list of resources that can amplify your market sizing and many other aspects of business planning and execution.