When considering taking your business global, success hinges on a deep understanding of your target market. While you no doubt have innovative products and success is all but guaranteed (in your head), neglecting the fundamental question of “who is buying?” can lead to costly missteps or even abject failure. This is where estimating market size, part of the foundation of global marketing intelligence, comes into play. Market size is straightforwardly the total potential demand for a product or service. Having this information in hand acts as a map, guiding you towards markets with viable customer bases.
Imagine, then, a scenario. You’re leading a coffee company specializing in single-origin, shade-grown Arabica beans. Scientifically grown, ethically sourced. Super bougie stuff. Your initial marketing efforts might paint a broad picture of a global audience of discerning coffee connoisseurs. You estimate some number of millions of customers, but where are they and how do you reach them? Market size intelligence measures like total addressable market analysis (I won’t do the math here) refines your data down to something more clear and usable in a business sense. Further analysis of secondary data reveals that within the high-end coffee market, pockets of strong demand exist in developed nations with a high concentration of affluent consumers with a penchant for ethical sourcing (your specialty). This now filtered knowledge allows your coffee company to tailor its marketing message, focusing on sustainability practices and the unique flavor profiles of their beans, with science.
The value proposition of your high-end offerings extends beyond mere sales figures, it also helps understand their motivations. Through secondary data like social media analysis and industry reports, insights emerge. Young consumers, for example, might be drawn to the trend-setting nature of your exclusive beans, seeking a unique experience even if they don’t really understand why their cup of joe is 8 times the price of everyone else’s.
For roasters, these ultra-high-end beans might not be significant contributors to their bottom line (you gotta diversify the beans!). Market size insights reveal that profitability lies not in sales of these exclusive lots, but in the marketing potential they unlock. This brings us to the difference between market size and market value. According to marketing expert Clifford Chi,
Market size is the total potential demand for a product or service. This number usually calculates the number of potential customers, units sold, or revenue generated. So, market size is an estimate of the overall market reach. Market value refers to the financial worth or estimated market capitalization of a company or industry. It’s a measure of perceived value. It can give you an idea of how much a company could sell for in a given market.
Acquiring such fancy, scientific and ethical beans signifies a commitment to quality and experimentation, attracting a broader customer base seeking an exceptional coffee experience, even if they never purchase the top-tier cups themselves. In this way, the coffee company may have a limited market size with expensive products, but will have access to greater market value through brand recognition. These hidden metrics are important to keep in mind as businesses expand globally. Constant environmental scanning is necessary to see what competitors are doing that works, and even to see how you can pivot your business to capitalize on trends.
Citations:
- https://blog.hubspot.com/marketing/author/clifford-chi?hubs_content=blog.hubspot.com/marketing/market-size&hubs_content-cta=-medium
- https://intelligence.coffee/2023/06/high-end-specialty-coffees-market/