Forums: Discussions for entrepreneurs and small business.

We are considering starting an on-line store for a particular target market.  This is a well defined market.  We know that there are 10 million people in the U.S. with a particular medical condition that are potential users for the store.   There are many individual manufacture sites out there but no 1 stop shop for this niche. We are users of the products, so I can estimate annual purchase amounts.

My question is this... how do I estimate how much of the market we can capture?  I don`t want to just say... well, 1 percent of 10 million users = 100,000 customers.

What is a good method for estimating number of customers?

I`ve always been taught to use comparables. Can you identify someone who utilizes the same business model? For example diabetics need many different types of medical supplies i.e. testing strips, testing equipment, insulin, etc. If you could find a comparable that is public you could determine their conversion numbers. Total sales/total transactions and then look at repeat purchase rate.

An absolute gem would be a comparable that recently had an IPO. When they file for an IPO all sorts of information must become public. You could look at that data and extrapolate your users.

Closing thought - knowing your audience is critical. If they are less computer savvy then the likelihood of internet purchase is lower.

 Good luck!


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I don`t know if this will produce the information you are seeking but if your comparable companies are publically traded then you might be able to glean information from their SEC filings at Edgar Reports: http://www.sec.gov/edgar.shtml  Plus you can always contact the company`s investor relations department to request a copy of their last annual report.

To research IPO`s try http://www.hoovers.com/global/ipoc/

 

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Nicole Champagne
Email: influencialexpectations@gmail.com
Cell: (734) 262-3730
Soar With Influencial Expectations!

When starting up, I always prefer the "ground up" method of building your projections. Attach a budget to specific marketing and sales strategies, then project the number of units sold each month.

If you scale this carefully for 12 months, it`ll give you a good idea of the cash you`ll need and give you a better chance of hitting your projections. Then, you can ramp marekting costs and market share in more general terms for subsequent years.

It`s not as sexy as the percentage of market projections, but it`s often more effective in the short term.

Jim

 

You can use the Google Adwords tool to find out how many people are querying the product. However, there's no way you will know how many customers are actually buying it.

https://adwords.google.com/select/KeywordToolExternal?forceLegacy=true

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