Market Research - Sizing the Market

Cole Mercer
A free video tutorial from Cole Mercer
Sr. Product Manager @ SoundCloud | Ex-Bonobos, Gen. Assembly
4.5 instructor rating • 3 courses • 153,613 students

Lecture description

Say you've always thought that donuts should be stuffed with superfoods. You've wondered if there are enough garlic and spirulina lovers out there - but those who are also ok with fried donuts. If these people exist, then cha-ching. If they don't, then you'll join the ranks of the other fantastic-but-fatally-flawed-flops. But how will you know?

Sizing the market is the answer. In this lecture, we'll discuss how to count your strong-stomached-spirulina-and-donut fans and figure out whether they're likely to pay for something which is probably going to make them feel... well... gross. 

Covered in this lecture:

  • Why you need to know the size of your market.
  • The difference between top-down and bottom-up market sizing.
  • How to do top-down market sizing.
  • How to do bottom-up market sizing.
  • How to use Google to find market data.
  • Learn about a tool to help you analyze competing website traffic.
  • Why Adwords is helpful in market sizing research.
  • The benefits of using social media in your research.

Learn more from the full course

Become a Product Manager | Learn the Skills & Get the Job

The most complete course available on Product Management. 13+ hours of videos, activities, interviews, & more

12:45:06 of on-demand video • Updated July 2021

  • Understand the varying role of a Product Manager through different types and sizes of companies
  • Decide which type of Product Manager best fits one's goals and personality
  • Understand the Product Lifecycle and how it applies to every product
  • Understand the modern Product Development Process that both Fortune 500s and Startups adhere to
  • Know how to identify ideas worth pursuing and dedicating resources to
  • Understand how to get at the root of customer pain points
  • Understand and communicate customer pain by type and frequency
  • Assess the core problem of a product
  • Find and compare competitors and competing products
  • Differentiate between Direct, Indirect, Substitute, and Potential competitors
  • Understand the process of Customer Development and how it relates to being a Product Manager
  • How to find potential interviewees for product interviews, user tests, and exploratory interviews
  • How to structure and run a customer interview
  • How to model interview questions correctly while avoiding bias
  • Navigate the four different types of customer interviews
  • Find potential interviewees both internally and externally
  • Write emails that will get users and potential customers to respond
  • Build user personas based on both qualitative and quantitative data
  • Understand the difference between a wireframe, a mockup, and a prototype
  • Sketch out a wireframe with just a pen and paper
  • Use Balsamiq to create wireframes at an intermediate level
  • Use a sketch system called POP for digitizing product sketches
  • Create specs for epics and user stories
  • Properly apply acceptance criteria
  • Run a variety of MVP experiments, such as pitch experiments, redirects, shadow buttons, and more
  • Correctly evaluate which product metrics to track and which to ignore
  • Apply the AARRR framework to your product
  • Apply the HEART framework to your product
  • Track your metrics using a variety of software
  • Create a product and feature roadmap
  • Create a product backlog and properly prioritize features
  • Calculate team velocity and build estimations for product delivery
  • Understand the difference between Agile and Waterfall development
  • Understand the difference between two popular Agile frames: Scrum and Kanban
  • Learn software development concepts like APIs, mobile development, Front End, Back End, MySQL, programming frameworks, and more
  • Communicate effectively with all the stakeholders of a product
  • Communicate effectively with engineers in a way they will appreciate and understand
  • Communicate effectively with designers by focusing on the things they care about most
  • Communicate effectively with executives and higher-ups
  • Understand the role of technology in modern Startups and Fortune 500s
  • Understand the basics of "The Cloud" and Servers vs. Clients
  • Understand the basics of front-end vs. back-end technology, tech stacks, and how they integrate together
  • Understand the basics of APIs, what they do, what they look like, and how your team might use them
  • Understand how to obtain relevant experience to set up for a transition to Product Management
  • Build a portfolio that will assist in a hiring application
  • How to self-brand online and build a following pre-hire
  • What to look for in Product Management jobs and what to ignore
  • How to apply insider tips and tricks to getting hired as a Product Manager
  • Craft a resume that appeals to a hiring manager for Product Management placement
  • Ace the Product Manager interview
  • Excel beyond getting hired
English [Auto] Everyone, welcome back, this section is all about competitive and market analysis, a big part of product management is making sure that the market you're attempting to address is large enough to make it worth going into. This applies if you're a product manager at a company and you're looking at building a feature or product that will put you in another market or if you're starting a new business on your own, there are two common approaches to thinking about market sizing. One of them is top down and the other one is bottom up. The top down analysis is calculated by finding the total market and then estimating what your share of the market is. Let's say that we're selling an iPhone app for, let's say, ice cream connoisseurs. Top down estimate would be something like, OK, we know there are 100000 ice cream connoisseurs with iPhones and iPads states. So if we can just get 10 percent of them to download our app at five dollars apiece, we're going to make fifty thousand dollars. The problem with this approach is that you need to make assumptions on how much market penetration you will have inside that market. Even though it sounds reasonable, it's not the most respected way of estimating the potential market. A bottom up analysis is done by thinking about the current sales of similar products and then estimating how much of those sales you can capture. This is a much more accurate approach because it looks at patterns that exist in sales today rather than the total market. This is a better way to do it as a product manager, but it takes a little more effort and takes a little bit longer. Again, let's pretend we have an iPhone app for ice cream connoisseurs. First, we must ask ourselves where people currently buy apps related to ice cream or food. Obviously, this would be the Apple App Store in this case. Next, we think about the volume of sales for existing similar apps. You may think that there's nothing similar to app, but in reality there's probably things at least slightly similar. If there are no other ice cream connoisseur apps, we can look at other apps that have to do with other types of desserts or foods. We do a little bit of online research or we look at websites like App anay and we look at the sales volumes and popularity for the existing apps out there. So let's say that the similar apps are downloaded about a thousand times per month globally. At that point, we can make a conservative assumption and say that if we get five percent of the sales that they do per month, it comes out to be about 50 downloads per month. So do you see the difference between these two approaches? The top down approach thinks about the total market size or the potential number of users, which is always quite optimistic. The bottom up market looks at the current trends and data to make sure our assumptions stay a little closer to reality. It is much better to be conservative when it comes to starting a product or business or adding a new feature than it is to be overly optimistic. Lastly, I want to give you some tips on tools and techniques you can use to look at some market data. One of the first things you can do is just Google industry reports for X or industry or market size for X, just using Google. This is a really good way to find already existing reports that industry research groups have put out. Secondly, if you are looking at websites of competitors or other similar apps, then you can use a website like Compete Dotcom and look at the amount of traffic the different competitive websites get. You can compare this to other ones or other industries and get a really nice competitive overview. Another tool you can use is the Google AdWords keyword tool. This is a tool that Google provides for people to do research on advertisements they want to place with Google. It shows you the volumes and related terms of searches on Google, and it is extremely valuable in determining the amount of interest out there for your app or your product. You can also search things like Twitter and Reddit to see what people are saying about things related to your product. This also has the bonus of showing you what frustrations they're having, if any, because people usually will add additional comments or respond and say, well, this is what I like or don't like about a certain product.