First part is done
Develop Market Segmentation for Your Idea.
Develop market segmentation for your idea, product, or technology. Brainstorm possible applications, narrow your focus to 6-12 most interesting opportunities, and complete the process with primary customer research.
Strive for specificity. In addition to listing potential industries, also list the markets, market segments, and prospective end users.
Describe what tasks the end users perform, what problems and needs they experience, and what benefits they would attain with your solution.
Primary customer research is king. No market segmentation is complete without it. Interview at least 10 prospective end-users / customers.
In the beginning, focus on not only quantity, but also variety of end users. As such, interview end users from across the top industries of
Next part:
estimate the Total Addressable Market Size for Your Beachhead Market.
By now you have developed the market segmentation for your idea and selected your beachhead market. For the time being, you will focus on this beachhead market and deselect other markets. Focus will take you far.
Now your goal is to estimate the size of your beachhead market. In this course, we use the term Total Addressable Market Size, or TAM.
Follow a Bottom Up approach. The key is to estimate how many end users exist in your beachhead market and identify how much revenue you will earn from each end user on an annual basis. Multiplying the two numbers gives you TAM.
Remember, the goal is not to have as large a TAM as possible. The goal is to have a reliable understanding of the size of the beachhead market, so that you can start planning your very scarce resources around it.
A good TAM for the beachhead market is in the range from $20 million to $100 million. If your TAM is less than $5 million, the market is probably too small and will not be of interest to prospective employees and investors. This doesn't mean you can't or shouldn't focus on a market this small, but do so if you have strategic considerations such as an opportunity to enter much larger markets quickly and efficiently.
If your TAM is greater than $1 billion, you're probably not being specific enough about who your end user is. In this case, your goal should be to add specificity to your End User Profile and redo the TAM calculation.