🎯 Market Sizing: Finding Your Treasure Map

Imagine you want to sell lemonade. But wait—how many people actually want lemonade? And how many could you realistically serve? Let’s go on an adventure to find out!

🌍 The Big Picture: What is Market Sizing?

Think of market sizing like counting how many fish are in the ocean before you go fishing.

Why does this matter?

• You don’t want to build a giant fishing boat if there are only 10 fish
• You don’t want a tiny net if there are millions of fish waiting for you

Simple Truth: Market sizing tells you how big your opportunity is—and whether it’s worth chasing.

🔍 Part 1: Audience Research

Finding Your Perfect Customers

Imagine you’re throwing a birthday party. You wouldn’t invite everyone in your city—you’d invite friends who actually want to come!

What is Audience Research?

Audience research is like being a detective. You’re finding out:

• Who might want what you’re selling
• What problems they have
• Where they hang out
• Why they would choose you

🎯 The 5 Magic Questions

1. WHO are they? (Age, job, hobbies)
2. WHAT keeps them up at night? (Problems)
3. WHERE do they spend time? (Online/offline)
4. WHEN do they need your solution? (Timing)
5. WHY would they pick you? (Your special power)

Real Example: Pet Food Company

Let’s say you want to sell healthy dog food:

📊 Ways to Research Your Audience

graph TD
    A["🔍 Research Methods"] --> B["📋 Surveys"]
    A --> C["💬 Interviews"]
    A --> D["🌐 Online Research"]
    A --> E["👀 Observation"]
    B --> F["Ask 100+ people questions"]
    C --> G["Deep conversations with 10-20 people"]
    D --> H["Social media, forums, reviews"]
    E --> I["Watch how people behave"]

Pro Tip: Listen More Than You Talk

The best audience research happens when you:

• Read customer reviews (good AND bad)
• Join online groups where your customers hang out
• Ask open questions like “Tell me about…”

📏 Part 2: Market Sizing

Measuring the Opportunity

Now that you know WHO your customers are, let’s figure out HOW MANY there are and HOW MUCH they might spend.

The Lemonade Stand Example

You want to open a lemonade stand. Let’s size this market:

Step 1: Count the people

• Your neighborhood has 500 houses
• Each house has about 3 people = 1,500 people

Step 2: Who drinks lemonade?

• Maybe 60% like lemonade = 900 people

Step 3: How often?

• In summer, maybe twice a month = 1,800 lemonades/month

Step 4: What would they pay?

• $2 per cup = $3,600/month potential

🧮 Two Ways to Size a Market

graph TD
    A["Market Sizing Methods"] --> B["🔼 Top-Down"]
    A --> C["🔽 Bottom-Up"]
    B --> D["Start with big numbers<br>Narrow down to your piece"]
    C --> E["Start with small numbers<br>Build up to the total"]

Top-Down Approach

“From the sky looking down”

1. Start with the HUGE total market
2. Cut it down based on who you can actually reach

Example: Online Tutoring

• Total education market: $100 billion
• Online portion: 20% = $20 billion
• Math tutoring: 15% = $3 billion
• Your target age group: 10% = $300 million

Bottom-Up Approach

“From the ground looking up”

1. Start with what YOU can actually do
2. Multiply by realistic numbers

Example: Online Tutoring

• You can teach 20 students/week
• Average price: $50/hour
• Hours per student: 2/week
• Your capacity: 20 × $50 × 2 = $2,000/week
• In a year: $104,000

Which Method is Better?

Smart Move: Use BOTH and compare!

🏆 Part 3: Total Addressable Market (TAM)

The Ultimate Treasure Chest

TAM is the answer to: “If I could sell to EVERYONE who could possibly want this, how much money is there?”

The Three Market Circles

Think of markets like three circles, one inside the other:

graph TD
    A["🌍 TAM<br>Total Addressable Market<br>EVERYONE who could buy"] --> B["📊 SAM<br>Serviceable Addressable Market<br>People you can reach"]
    B --> C[🎯 SOM<br>Serviceable Obtainable Market<br>People you'll actually get]

Understanding Each Circle

🌍 TAM (Total Addressable Market)

• The ENTIRE market if you had zero limits
• All the fish in all the oceans
• Example: All smartphone users worldwide = 6 billion people

📊 SAM (Serviceable Addressable Market)

• The part YOU can actually serve
• Fish in oceans you can sail to
• Example: Smartphone users who speak English = 1.5 billion

🎯 SOM (Serviceable Obtainable Market)

• What you’ll realistically capture
• Fish you’ll actually catch this year
• Example: English speakers who find your app = 50 million

Real Example: Coffee Shop

Let’s size a coffee shop market:

How to Calculate TAM

Method 1: Industry Reports

• Find research from experts
• Sources: Government data, industry associations

Method 2: Count and Multiply

TAM = Number of customers × Price × Frequency

Example:
- 50 million potential customers
- Average purchase: $20
- Buy 4 times per year
- TAM = 50M × $20 × 4 = $4 billion

Method 3: Value Theory

• What’s the PROBLEM worth solving?
• How much TIME or MONEY does your solution save?

🎪 Putting It All Together

The Market Sizing Journey

graph TD
    A["1. 🔍 Audience Research<br>Who are your customers?"] --> B["2. 📏 Market Sizing<br>How big is the opportunity?"]
    B --> C["3. 🎯 TAM/SAM/SOM<br>What can you capture?"]
    C --> D["4. 📈 Decision Time<br>Is this worth pursuing?"]

Quick Checklist

Before launching anything, ask yourself:

• [ ] Do I know WHO my customers are?
• [ ] Do I understand their PROBLEMS?
• [ ] Have I sized the market BOTH ways (top-down AND bottom-up)?
• [ ] Is my TAM big enough to matter?
• [ ] Is my SOM realistic and achievable?

The Golden Rule

“A small slice of a HUGE pie beats a big slice of a tiny pie.”

But also remember:

“A realistic small slice you can actually GET beats an imaginary huge slice.”

🚀 Your Turn!

You now have the tools to:

1. Research your audience like a detective
2. Size your market from both directions
3. Calculate TAM, SAM, and SOM

The best business ideas aren’t just good ideas—they’re good ideas with BIG ENOUGH markets and CLEAR ENOUGH customers.

Go find your treasure! 🗺️

Remember: Even the biggest companies started by understanding one simple question: “Who wants what I’m selling, and how many of them are there?”