This document discusses how to conduct a market analysis to identify the total available market (TAM) size for a new product or service. It recommends determining the current TAM, growth rate, factors driving market trends and adoption, as well as competition and market structure. Examples are provided showing how to estimate the server virtualization TAM using top-down and bottom-up approaches, as well as the potential market for plug-in hybrid electric vehicles using a comparable method. The document stresses the importance of citing reliable data sources and providing realistic market projections to convince investors of the opportunity size.

2. Identifying target customer

3. Customer segmentation

4. Sizing: Determine “Total Available Market” for your product - today & growth rate

5. Factors driving this market, trends in the market that make it ripe for your product/disruption; assumptions to believe it’ll take off

6. Also factors inhibiting it

7. Structure of the market

8. Competition (separate session), substitutes

9. Why is it important

10. Helps you define your customer

13. $ (or Rupee) value of total product/service that could be sold if every person for whom product is applicable would buy it at the price point you envision

14. It’s the full pie – sum of revenues of all players in the space (existing & new)

15. So TAM =/= your company’s revenue projections. But your revenues should be a believable % of the market

16. Common market sizing patterns

17. Comparable – Look at adoption curve of other similar products; VCs love analogies

18. Top down – Look at how many households…

19. Subset – Total market for cars is X, we go after hybrid cars first…

21. Example-1 Server Virtualization – Bottom up Approach

22. Example-2 PHEVs – Comparable method Exhibit A: Comparison between Normal car, Hybrid and PHEV (and later how different)

23. Example-2 PHEVs – Comparable method

24. Example-3 eLearning – Segment by segment

26. But is good discipline to get you to think & investors will ask

27. Where to get data?

28. Google is good but trust reliable sources

29. Market research firms like Gartner, Forrester: Expensive !

30. Lots of free sources: CIA Fact Book

31. Do’s

32. Mention the sources of the data

33. Size the market in more than one way to convince yourself

34. Do a sniff test

35. Projections should be for optimistic, yet realistic/likely case

36. VCs will give it a haircut anyway

37. Dont‘s

38. Don’t be too broad – doesn’t help to say healthcare is a $T market – that’s not your applicable TAM

39. DON’T fill your slides with numbers from industry reports

40. Don’t try to solve every problem in the world

41. Don’t assume large market means a large market share

42. “The market is $60B for this product, so even if we get 2% of this market, we have a large company”