To calculate your share of the market, first define the size of the market in which you compete.
The total available market can be described geographically, demographically, by product demand, or some combination of all three. The size of the market matters enormously to major global companies like Nike or Levi’s; but to an enterprise the size of yours, what matters is your target market – the one within the sphere of your business’s influence and reach.
Allow me to elaborate on the methodology to define total target market:
- Geographic targeting: Where do your likely customers live, work, and play; and how many are there?
- Demographic targeting: How many people or businesses actually fit your customer profile? What do people or businesses that are inclined to buy from you look like, sound like, and act like? An eye-opening exercise is to list your company’s top clients – say, the top 10 to 20 percent, which probably accounts for 80 percent of total revenue – and describe the decision maker and/or the organization demographically. Note not only the generic things – like age and gender of the buyer, or type of and years in existence of a company – but also their interests and hobbies, likes and dislikes, political and social orientation, lifestyle, affluence, and creditworthiness. You may be amazed at how much alike your best customers are to each other.
- Product-demand targeting: Sometimes, the most effective way to measure your target market’s size is through an analysis of how many sales of products like yours occur in the marketplace. The mistake many business owners and market analysts make is treating market potential as an exact science. It is not. Whatever number or dollar amount you uncover will be an educated guess, at best – but it’s better than having no number at all.
To aid in your guesswork, you may want to visit the reference area of a local or university library and flip through the Standard Rate and Data Service (SRDS) Local Market Audience Analyst, assuming the library subscribes to the service, to match up the demographics of your best customers with other potential awards buyers in your market area.
– Vince DiCecco, Your Personal Business Trainer
