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Market Sizing & Forecasting

What is market sizing and forecasting?

Market sizing is necessary for a company to understand its target market size and market share. Forecasting involves estimating market growth based on various macro and market dynamics in order to estimate market size and share for the next 3 or 5 years.

Market Sizing involves estimating:

  • The potential available Market (PAM) in terms of the overall number of patients, procedures, and tests that can be done if there were no market constraints.
  • The size of the Total Addressable/Available Market (TAM) in terms of volume (no. of procedures, tests, equipment, consumables, devices, etc.) and value ($)
  • The size of the Serviceable Addressable Market (SAM) (SAM represents the market we can actually reach with our sales team, resellers, distribution channel partners, etc.)
  • The Share of the Market (SOM) (the portion of the market we actually expect to capture with our brand/product offerings)

Why is Market Sizing and Forecasting done?

Market Sizing and Forecasting are done to accurately estimate the size of the market, the obtainable market share, and the level of investment required, and also help companies to allocate budgets appropriately, and inform strategic planning for the upcoming financial year.

When is Market Sizing and Forecasting done?

  • If you are an upstream marketing manager/product manager and have a final product concept that you want to develop and launch in the market but want to size the market opportunity and share before going ahead with product development
  • If you are a regional/country manager or a down-stream marketing manager and are planning to enter a new market with existing players and want to evaluate the market opportunity and share to estimate the marketing spends required
  • If you are an investment firm and want to validate the market opportunity and share before investing in a technology or a company
  • If you are a marketing manager/director and are looking for investors or partners and want to validate the market opportunity and share for valuation purposes
  • If you are an upstream marketing manager/product manager and want to evaluate a potential M&A opportunity of a specific technology for valuation purpose
  • If you are a regional/country manager or a downstream marketing manager who is already in the market but is struggling with market share and wants to re-evaluate the market opportunity and competitive landscape.
  • And many more….

How is Market Sizing and Forecasting performed?

Market Sizing and Forecasting are performed by building robust market models, taking into account various macro and market-related factors there are two approaches to building market sizing models:

  • A top-down approach – a simple approach conducted by collecting the total sales and revenue of all players in the market
  • A bottom-up approach – a more robust approach that highlights opportunity areas by collecting facility and segment data and then extrapolating for the overall market
  • Market Forecasting approach – The drivers of demand in each segment are forecasted and projected based on how and by how much are they likely to change in the future. Sensitivity analyses and what-if scenarios are conducted to understand the most critical assumptions and to gauge risks to the baseline forecast.

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