Today I am teaching you how to quickly calculate the size of your target market.
I am usually required to do this over the phone with a prospective client when I need to get a quick idea of their current market share.
So first you need to start with 2 questions: what do you sell, and who do you sell it to? For instance, perhaps you sell wedding cakes to future brides in New Jersey. Well I know New Jersey has roughly 8 million people, and I can assume the lifespan of the average person is 80 years. Now I will also assume that there are roughly the same amount of 80 year olds in New Jersey as there are 1 year olds.
So then I will divide 80 by 8 million, and so I get 100,000 people in each age group. Because we are only dealing with women, who I assume select their wedding cake (I agree men need to help more), we can divide that number in half (50,000) because there are about an equal proportion of men and women living in New Jersey.
I will assume that women getting married in New Jersey vary in age from 23-34. Now, 34-23=11 age groups of women that get married in New Jersey. Now I will multiply that number by 50,000 women in each age group in New Jersey, and I get 550,000 women.
However, I am guessing 20% of these women either choose not to get married, become nuns, pass away or don't prefer the company of men. I now multiply .80 by 550,000 and get 440,000 who will be shopping for a wedding cake in New Jersey.
Unless the population of New Jersey changes dramatically, you can reasonably forecast that an identical amount of women will enter this market and exit this market equally each year. So if you sell 40,000 wedding cakes in New Jersey each year, your market share is approximately 11%. Now try to tell me that wasn't fun.
With a little information and a whole lot of estimating, you can quickly calculate the size of any market you can think of.
Don't compete — DOMINATE.
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Matt Steffen was Listed by Forbes as the #1 Marketing Consultant Who Avoids the B.S.