You need to complete this exercise whether you’re looking at one possible market or trying to prioritize when and if to go after several markets.
NOTE: Extra credit will be given to those students who answer all the parts of the question and present their findings in the form of a matrix.
a. Addressable market size – there are some great government information sources that can give you detailed information by vertical–all for free. Analyst reports and articles are also a good source of market size data.
b. Degree of market penetration – this is trickier to determine, but even if you can’t find hard data do your best to come up with an educated guess.
c. Elasticity of demand – is your product a must have or a nice to have for your target audience? Understanding that will help you put together realistic pricing and sales projections, especially in the case of a recessionary economy.
d. Strength of existing incumbents – as is most often the case, your target market is also served by the competition. Try to get a feel for how strongly the incumbents are dug in, and how hard it would be to displace them.
e. Awareness of your type of product – will you need to spend cycles educating the market on the value of this type of product or is it more a matter of differentiating your offering?
f. Barriers to entry – how easy is it for someone else to enter this market?
g. Pricing patterns – is there downward pressure on pricing, or has market consolidation and scarcity driven up price points?