The single most common research failure the firm sees is the single number market size. A single number is almost always built from a single method, and a single method is almost always wrong. The right answer is four numbers, built from four independent methods, compared against each other openly.
The four angles we use
- Top down. Start from the best public estimate of the category, subtract the portion that is clearly not addressable for the client, and write down the remainder with the source and the cut.
- Bottom up. Count buyers by segment, multiply by a realistic annual spend per buyer, and add the segments. This forces the research team to decide who a buyer actually is.
- Revenue of known players. Sum the known revenue of the handful of credible competitors in the space, then add an allowance for the long tail. This calibrates the other two angles against what money is already moving.
- Budget anchored. Estimate the share of the relevant line in a typical buyer's budget that the client can realistically win, and multiply by the number of buyers. This is the hardest method and usually the most honest.
Four angles give four answers. If the answers cluster, the firm can write down a range with confidence and explain the cluster. If the answers diverge, that divergence is the finding, and the research note should say so in writing rather than averaging the divergence into a number that hides it.
What the firm will not do
The firm will not present a market size without the method. The firm will not present a market size without an honest statement of what sits outside the addressable portion and why. The firm will not present a market size as a single headline number when the underlying methods disagree by more than the client can afford to be wrong.
A market size that cannot be defended in a hostile conversation was not worth building. That is the standard we hold the work to.