Define your company’s positioning:
Rob was excited to develop a display board app, and he knew his consumer profile of interior designers, architects and product designers. But, he knew he had to get the positioning just right with this finicky crowd.
Rob researched the number of potential users who already had an iPad or tablet which is around 1 million. He believes that every designer will be using display board apps within 5 years, but estimated that convincing 20% of potential users, or 200,000, is possible. Rob researched competitor products but there were none yet. He put together some mock ups and tested price points of $10 at basic functionality, $20 at medium version and $30 at advanced functionality with designer friends. Most responders suggested the $10 and gave feedback what they really needed.
Rob calculated the potential market to be $2 million for this product at the basic version. Given designer feedback, Rob designed a simple and intuitive user interface and waited on adding bells and whistles. He decided to use “Simply stylish” to reinforce the positioning. Rob was ready to go.
Courtney, a former professional dancer and her new best friend Sally, an accountant, have teamed up to create a dance studio. Once they did research, they found several dance studios in town. The existing studios were large ones with lots of volume. Thelarge class sizes kept tuition down but turnover was also high. Trying to compete on price was not attractive.
Courtney’s husband had signed up for golf lessons where each lesson was videotaped. The video, accessible on the web, included comments of things to work on before the next class. Her husband thought seeing the video really helped his technique greatly. Courtney and Sally researched how they could video and provide analysis for dance. They created a chart of what the local dance studios programs and how they marketed. The duo asked mothers of dance students about the dance studios.
Courtney and Sally estimated that there were 4,000 potential dancers in their area. However, they wanted to charge a higher price, $175 monthly or $2,100 annually , with video analysis and Courtney’s recent professional dance experience. The higher price would make the market smaller; they think that only 15% of the overall market was relevant.
The market size is estimated to be 4,000 X 15% X $2,100 or $1,260,000 million. The team decided to focus on a higher end clientele likely with more dance experience. They settled on the tag line of “Where artistry and technology dance.”
David discovered swimming later in life but always had the same problem when he swam. He would forget the number of laps he swam. During an hour, it was easy to forget 1 lap when you were doing 50. Other swimmers had the same problem. David wanted to something about it- find a lap counter. He checked around and looked online. He mapped out who the competitors were and the price points. There were some that were big like a clock face that cost little and some that were watch size. But, these were heart rate monitors and cost a lot.
He asked other swimmers the benefits they wanted: ring size, laps counted and less than $30. They did not really want any other information. David decided to go with simple and inexpensive as the positioning and sell through Amazon.
FAQ & Resources
What is market size?
Market size is the number of potential customers times the annual purchase amount.
What are potential sales?
Potential sales is the market size times a percentage of the market that a company can convert to buyers.