This market sizing diagram outlines the steps to estimate the market value of a product or service. Here’s a brief explanation of each step:
Total Space: Begin with the broadest measure, which includes the entire population, households, or businesses.
Eligible Space: Narrow down the total space to those who qualify based on specific criteria such as gender, age, and income.
Interested Space: Further refine the group to those who show interest, indicated by the frequency of orders or the number of products purchased.
Replacement Rate: Consider the rate at which products are replaced or consumed within this interested space.
Weighted Average Cost: Calculate the average cost of the product, factoring in different prices and quantities.
Market Value: Combine these elements to estimate the total market value for the product.
This framework helps in breaking down a broad population into a targeted market, making it easier to estimate potential revenue.
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