“What is the size of the market?“
This seems like such a “reasonable” question, for a corporate leader to ask, doesn’t it? If an organization is going to invest resources into a new product development, at least we should know what size is our target audience. With global communications and dissolving geographic borders, attempting to divine the “total available market” is simply a fool’s errand and a waste of effort, one of the “thousand cuts” that slow time-to-market in a development cycle.
In trying to “take swags” at a market size, traditional product marketing managers build their guesses like this:
Targets built on…
Assumptions based on…
Estimates derived from…
Surveys mass conducted and randomly sampled.
So product marketing managers build this towering pile of guesses, put it into some tedious PPT, and everyone feels good that they have the “data” to support program approval. Maybe they accompany a sales visit and talk to one or two customers so they can feel like their getting “real” proof points. But in the end, is it any wonder why this process just doesn’t work? The odds of successfully justifying a new product are just as good as visiting a mystical tarot card reader.
In contrast, Zara has exploited a “fast fashion” lean product development cycle. According to a recent article from the New York Times:
“In short…Inditex has prospered. Echevarría said that is because the customer is always determining production — not the other way around. Every piece of clothing the company makes has, in a way, been requested. A business model that is so closely attuned to the customer does not share the cycle of a financial crisis.”
There are seven billion humans living on our planet. That is your “total available market”. Find a low cost way to flexibly service their demand without trying to predict the future.
The following comments, also from the same Times article, gives a hint as to how Zara actually tries to forecast its market:
“Expansion, however, poses a threat to Zara’s process by putting stores far from the factories and logistics center in Europe. Echevarría said the company very carefully selects the cities where it opens new stores.”
Geographic population statistics are generally good, solid numbers. Not swags at potential market demand for individual products. Finding solid data rather than conducting or purchasing “thin” market research is at least a better foundation for any further assumptions.
Optimal Variation 