Main purpose of companies is to boost their profit (maximizing) and ensure the consistency in terms of their profit in the long run. Other things equal, the companies ensure this purpose by increasing sales (by the means of physical or monetary funds), in other words, boosting their market share. In this regard, learning the market size and market share is significant as a road map for companies. In the way as states know, protect or expands their borders by the help of maps, companies succeed to prepare game winning strategies by studying the market size and their and their competitors’ market share as well.
About the research
The market size has a range of types:
o Total market size or TAM (Total Available Market)
o SAM ( Served Available Market)
Total market size is an amount or value of any product (service) sold in the market in a certain year and in a certain point of supply chain. Totel market size is defined by both measurement units and money. The extent of the market is an indicator of market opportunities, and companies prefer to operate in massive markets.
However, a massive market size does not always mean a vast opportunity. Main customers of the market may be unwilling to purchase the products of the company or the company itself may be reluctant to operate and sell products in that market. In this point, another type of the market size occurs which is called Served Available Market.
Served Available Market refers to the part of a market which can be served through existing sales channels of companies. For example, a company which sells coffee solely through the coffee restaurants considers the total amount of coffee cups sold in the same way as its SAM. In contrast, coffee beans sold in packages in supermarkets are not included in the SAM for that company.
The content and benefits of the research
Market size researches are conducted mainly for the following purposes:
- To prepare a plan to boost existing sales
- To evaluate market share of the company and its competitiors and their positions in the market
- To introduce new products to the market or to enter a new market
- To position products according to segments, and to study the market share by the segments
- To prepare marketing strategy for the target market