How do you find market size for a product?
The same way we find the weight of a circus.
Let us start with a fun question. The following is neither a trick question nor a test of trivia knowledge. Do not google, do not wait for me to answer your follow-up question. Use only the information you already know and answer it.
In this multiple choice question, which option are you most confident about?
The total weight of a circus tent (with no people), animals and props is
- Exactly 457 tons
- Exactly 5240 tons
- Exactly 24,635 lbs
- Between 4000 and 7000 ton
- Between 100lbs and 100,000 ton
What did you pick?
I will give you another chance to change your answer. Note that I did not ask you what is the correct answer but the option you are most confident about. Think of it another way. If you were to bet 10 dollars on one option, which one will it be?
If you answered (4) or (5). You are on the right path.
Any answer that states a single number is precise but comes with considerable uncertainty. We are not looking for a precise answer here. We are looking for certainty. That leaves out (1) (2) and (3).
Option (4) is not bad but its range is too narrow to give us high confidence.
- A circus has one main tent that has 30 to 50 poles weighing 10 to 40 lbs each
- It has 2 to 3 secondary tents with 10-30 poles weighing 10 to 40 lbs each
- Each tarp weighs 1 to 4 tons
- A circus has 4 to 8 lions weighing 300 to 400 lbs
- A circus has 3 to 10 elephants weighing 2000 to 3000 lbs
- you get the picture
What you have done by looking at the parts is reduced your high margin of error in the total to many smaller margins of errors in the components. That helps you get more precise (smaller margin of error) because you are handling components you have more knowledge about and can improve your knowledge about. When you add up these components the total margin of error will be far less than what it was when you estimated the total directly.
So how do you find the weight of circus? You try to make it a range estimate with a stated margin of error and confidence level. You try not to make a direct estimate with high margin of error. You estimate the parts and then come up with a better estimate with lower margin of error. You never try to state a single number that is guaranteed to be wrong.
Now how do you estimate the market size for
- Curling irons?
- Blow Dry Bar
- Wearable fitness device
- DELL Tablet