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How Big Are Your Markets?

Updated: May 28

This is a simple question, but for B2B companies, the answer depends on many factors and how those factors affect underlying demand. The fundamental factors to consider include:

  • The number of businesses in the market

  • The number of employees in those businesses

  • The propensity of businesses to buy your offering

  • The market maturity of the types of products or services that you are offering

  • The relative economic advancement of the countries in which the businesses are located

  • The relative technology intensity of the countries in which the businesses are located

  • Your ability to address various segments of the market scattered around the world

This is further complicated by the fact that your market is not really one market. Rather it is comprised of many sub-markets or segments. The segments are typically defined by industry, business size, geographic area, and functional area of the organization. Each of these segments can have different buying characteristics that affect the amount of business that potentially exists for you and your competitors.

At a high level, start by trying to size the market broadly by country. The two charts below illustrate simplistic views of relative market size for the top 15 countries. The charts indicate that there is a big difference between gauging total market size based on GDP and gauging market size based on population.

All of the G7 countries (United States, Japan, Germany, United Kingdom, France, Italy, and Canada) join the top 15 economies when the countries are ranked by GDP as shown in Chart 1. However, only two G7 countries (United States and Japan) join the top 15 countries when the countries are ranked by population as shown in Chart 2.

Focusing on the top 15 countries based on GDP listed in Chart 1 above, additional significant differences in market characteristics are obvious from the next two charts. While China and India are ranked 1st and 2nd based on population and 2nd and 6th based on GDP, they rank much lower based on relative economic advancement (12th and 15th respectively) and relative technology intensity (14th and 15th respectively). Factors such as these, help explain why some large economies might rank lower in terms of market size, while some smaller economies might rank higher in terms of market size.

When preparing global marketing and sales tactical and strategic plans, keep in mind that the top 15 economies in the world account for over three quarters of total global economic activity. As shown in Chart 5, United States and China alone account for over 42% of total GDP, and the top 5 economies account for 57% of total GDP.

The B2B Market Sizing Tool contains built-in adjustments for underlying market strength. The market factors vary by country. They also vary by industry and business size. They combine to generate a realistic view of the market with detailed segments. Factors such as these help explain why China with four times as many people and workers than the United States has 20% less GDP and has less potential market opportunity for most products and services.

When preparing your market estimates for B2B products and services, utilize as much relevant data as you can. You will generate more accurate estimates, you will align your plans more closely to market realities, and you will make more successful decisions.

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