Case study: We have analyzed patient-safety procedures in a few hospitals.
We have determined that our innovative technology would generate the most value in the largest hospitals (the top 25%, ranked by size).
Even if you do not seek external financing, understanding your market potential is essential for a range of different strategic decisions, in areas such as: Innovative startups must also evaluate the size and nature of their market when arranging more tactical issues such as selecting a bank, an accountant or legal representation.
The starting point for estimating market size is to understand the problem you solve for customers and the potential value your product generates for them.
All early-stage entrepreneurs and startups must define their target customer. The creation of a “day-in-the-life summary” will also help you analyze the nature of the customer problem you are solving.) Your target customer equals the person or company for whom your technology solves a specific problem.
To define your target customer you must: Given the importance of defining your target customer, it is crucial to set aside enough time to do a proper analysis of this first step.This exercise consists of five steps to help you estimate the total market potential for a product.In each step, we build on a health innovation case study that assumes the problem we solve relates to patient safety in hospitals.Case study: By studying publicly available sources, we have found out that in our target group there are 1,300 hospitals in Canada and the United States.Refine your market size by assuming a penetration rate for your category of product.For a more detailed understanding of how markets develop, read the article Technology adoption lifecycle.An industry size business plan is necessary for budgeting and marketing, especially for those who will seek third-party financing.Estimate the total number of target customers in the market—companies who have a profile similar to that of your target customer.If you’re a startup venture in Ontario or another Canadian province, you can use industry databases such as those offered by Statistics Canada, U. Bureau of Economic Analysis or Hoovers to help you quantify your market.If this is the case, completing the exercise below may help you better grasp the market size for each application.This will make it easier to prioritize which problem to solve first.