Your target market’s size is particularly interesting, because you can use it to calculate and estimate growth potential, and to make sure there is enough potential buying power out there to support your venture.
You should answer the following questions:
1. Currently, how many new customers are entering the market?
The greater the number of new customers entering the market (in a given period) the better. New customers are less likely to have the same knowledge or preconceptions about the market as experienced customers/users. Newcomers won’t necessarily know who the biggest players are – which gives you a better chance of being their first choice.
2. How mobile are the existing customers?
Would it be easy to draw existing customers away from your competitors, or would it be difficult? Would there be costs involved, for people coming over to you? If the cost of switching providers is too high, and it’s tough to make the change, you either have to find some way to lower the cost and inconvenience of shifting, or focus your efforts on attracting totally new users – first-timers – and making them loyal (even locked-in) customers. If you can manage to do BOTH of these things, you’re in a truly excellent position.
The answers to the two questions above tell you how attractive the market is, for a new company such as yours. They tell you how easy or difficult it will be to acquire customers. Keep in mind, though, that if your marketing is very smart and very effective, it’s possible to develop and broaden the market, and end up with many more customers than might at first seem even to exist.