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      HomeSoftware/BusinessMarket Size: Why Is It Important for Your Business Growth?

      Market Size: Why Is It Important for Your Business Growth?

      Success is certainly the goal of every business owner. In addition to the importance of final results in a business, to achieve success there are also several formulas that companies can follow. Regardless of the company’s experience, determining the market size is one of the most effective steps to achieve business success.

      By using a marketing automation system to make it easier to analyze the number of individuals who have the potential to make purchases and individuals who use the company’s products or services, the company will be able to maximize the potential for future business success more easily.


      Table of Content:

        What Is Market Size?

        Market size can be interpreted briefly as the size of the market share. To quote Chron, market size is the maximum total sales and number of customers, generally in one year, that a company can access to find out the value of its business. When understanding the size of the market, the company will get information about its potential users and the estimated profit derived from a product.

        In addition to the products available in the market, it can also provide the ability for companies to predict when a new product will reach its maximum sales limit when it is launched by providing a stable level of sales from the previous product. That’s why market size is important for businesses to achieve success more quickly.

        Types of Market Size

        If you want to apply the market sizing method to your business, here are examples of market sizes that you can use:

        Niche Market

        According to Cerdasco, niche markets are specified segments and tend to be small market segments. Small segments mean that the niche market has unique consumer characteristics and is different from the market in general. Geographic area, lifestyle, profession, and even the habits of the consumers could influence the difference a niche market has.

        Companies with this market size should always be ready to meet the unique needs of the consumers and must be sure to provide high-quality services. The reason behind that is that consumers in niche markets have budgets that tend to be higher than the market in general. What is also important for a company that chooses a niche market is the company’s availability to meet various demands from customers; as stated before, they tend to be unique.

        Not only that, but the niche market also presents another advantage for businesses with limited resources by not requiring the company to compete in the main market. However, niche markets are rarely applied in applying market size in Indonesia or in other developing countries.

        Mass Market

        In contrast to the notion of a niche market, the mass market is a market that has a variety of potential customers. The marketed products and services are also the opposite of niche markets. The mass-market tends to sell common products, regardless of the consumer’s hobbies, professions, or culture.

        Despite having a larger area of ​​potential customers, products on the mass market do not provide a high profit per unit. Instead, any product on the mass market tends to be easier to manufacture, making it cost way under products of a niche market.

        Steps to Calculate Market Size

        Market size

        After knowing the two types of market size, it turns out that calculating market size need to be done specifically. Quoting Market Research, here are the steps on how to estimate market size:

        1. The first step is to record the number of potential customers using the accounting system, which is then followed by an estimated number of penetrations considering that not all potential customers can afford the products being marketed,
        2. The data of the potential customers must be clear. For example, the data shows the age of 20 to 50 years. Potential customer data shows the number 100, out of 100 potential customers it would be shown that there are only 80% of it who will make a purchase, while 20% of the total have a low level of possibility of buying,
        3. Next, if the lifetime of a product is two months, there will be an assumption in the customer that they will make a purchase every two months. So, it can be seen that the sales volume occurred during one year is 600 units (100 people x 6).
        4. Lastly, assume that the selling price is at IDR 50/unit; from the data, the market value for the product is IDR 30,000 (600 x 50).
        download skema harga software erp
        download skema harga software erp

        Market Categorization

        In the process of calculating market size, there are several market categorizations that companies, namely commonly apply:

        • Potential Market

        A potential market means a group of consumers who want a product, but not every individual in the pool can afford to pay for the product. In brief, the market potential means the company understands the capabilities of its customers. it can be a shadow to show the number of market size by the number of people that is the potential.

        • Market availability

        This is a situation when a consumer desires to buy a product as well as the budget to buy it. Market availability is a situation where the consumers have effective demand.

        • Meet market availability

        Meeting the market availability represents a situation where the market in question already has consumers with effective demand. The law has also permitted people to buy and use the goods.

        • Target market

        The target market is a market that is available and has indeed fulfilled the company’s service requirements.

        • Penetrated market

        Penetrated market means a market that already has a group of individuals who have purchased and used a product.

        Tips for Market Sizing

        To optimally implement market size as well as market calculations, here are things that you can consider doing:

        • The more questions, the better

        Interviewing the business or those who are familiar with the topic could be a golden path for you to understand market sizing. Suppliers, dealers, distributors, and others. You have to ask them questions to get that quality knowledge.

        • Confidence is key!

        The business world is unpredictable and is always changing. Therefore, you need to remain confident when presenting your idea. In this case, it is a matter of how you want your colleagues to accept your choice of market size. You can present the results of your thoughts results and the calculations you have done to achieve a clear business picture this include the market size.

        • Store your data well

        Paying more attention to the details, determining the market size requires a lot of supporting data. Therefore, it will be very efficient for you to store the data in a neat and organized manner, use the trusted ERP software to help you manage and store your data.


        In the end, determining the market share size is the same as analyzing the potential customers for your business. Determining the market size is also a way for companies to quickly get to know their consumers in terms of characteristics and habits.

        It also affects the company’s ability to grow due to increased market awareness. Companies that understand the size of their market share will be easier to compete in their field. Use survey management software to maximize your business’ market size analysis results.


        Chandra Natsir
        Chandra Natsir
        A content writer with a strong interest in writing and technology. Chandra is dedicated to writing useful, entertaining, and relevant information for readers, and he continues to develop content that connects and inspires them.

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