Evaluating the potential of your market is one of the most critical steps in your business creation project. The answers obtained in this study will impact several levels: interest of the project, development prospects, objectives, etc.
It is a complex job, many parameters must be taken into account. This file gives you several information and tips to help you assess the potential of your market.
Analyze the market globally
To assess the potential of a market, it is necessary to know its size within your catchment area. You must, therefore, precisely determine your market and your radius of action.
To obtain information on a market , it is possible to carry out a documentary study. The INSEE website is full of tools and studies to provide you with information:
- The local statistics tool, which makes it possible to obtain information on individuals and companies within a geographical area,
- The numerous study reports published on the website.
Then many other organizations regularly publish studies. It is necessary to research the Internet and privilege the information from reliable organizations (organizations of the profession, professional statisticians, recognized media).
Finally, your experience and knowledge of the market you are targeting are your best assets. An entrepreneur who has accumulated experience in a sector of activity will have a good knowledge of his market without searching for additional information. This knowledge makes it easier to spot opportunities by observing and interacting with customers’ behavior.
Example of targeting
If you are creating a recruitment firm specializing in IT activities, you must determine the number of companies with recruitment needs on these profiles within your scope of action.
Deepen the study to refine the potential of your market
Once you have obtained a precise idea of the overall volume of potential customers in your market, you need to refine the study to obtain more precise information:
- what proportion of targeted customers could consume your products or services?
- What is the frequency of their needs?
Surveys and polls
Surveys and polls are excellent tools to get answers to these questions. By interviewing a sufficient panel of people or companies that match the profile of your future customers, you can get an idea of the proportion interested in your product or service offering and their frequency of consumption.
Continuation of our previous example
If we continue our previous example, it consists of trying to find out:
- How many companies need help with their recruiting process?
- How much recruitment on IT profiles do these companies need to achieve on average each year?
The study will help refine the size of the actual market, eliminating all companies that manage their recruitment internally and do not need to recruit IT profiles.
The issue of new markets
Evaluating the potential of a market can be particularly complicated if your project is innovative. In these situations, your market does not yet exist or is in its infancy.
Market potential and competition
The main principles
After estimating the size of your potential market, you need to look at the competitors already in place. Indeed, you may not be the only company to offer an offer on the market. To do this, you must identify the competitors in your catchment area and study their characteristics: annual sales volume, number of customers, details of the proposed offer, market share, means available, etc.
This analysis is essential if your offer is similar to the one already offered by your competitors. You will get a reasonable idea of how much market share your business can expect to achieve within your means. At the same time, you can also form an opinion on the feasibility of your project.
On the other hand, if your positioning is different from that of your competitors, you will have to estimate the share of customers who might prefer your new approach.