UNIT 1 KMBNMK02

-SHREY SHUKLA
ASST. PROF.
PSIT KANPUR
 Meaning of Marketing Analytics:

• Practice of measuring, managing, and analyzing marketing performance.

• Helps maximize marketing effectiveness and optimize ROI.
• Involves collecting data from channels like social media, websites, emails, and
ads.
• Aims to provide insights for data-driven decision-making.
 Characteristics of Marketing Analytics:

• Data-Driven: Relies on data to understand consumer behavior and campaign

performance.
• Continuous Process: Requires ongoing monitoring, analysis, and adjustments.
• Multi-Channel Integration: Combines data from various marketing channels.
• Predictive and Prescriptive: Analyzes past data to predict trends and prescribe
actions.
• Customer-Centric: Focuses on customer behavior, preferences, and needs.
• Focuses on ROI: Evaluates the return on investment of marketing activities.
 Advantages of Marketing Analytics:

• Better Decision-Making: Enables informed, data-driven decisions.

• Improved Customer Targeting: Helps create personalized campaigns.
• Enhanced ROI: Identifies the most effective marketing efforts for better resource allocation.
• Competitive Advantage: Provides insights into market trends and competitor strategies.
• Optimization of Marketing Channels: Identifies high-performing channels for optimization.
• Identification of Opportunities and Threats: Recognizes emerging trends and potential risks.
 Disadvantages of Marketing Analytics:

• Data Privacy Concerns: Risks associated with collecting and using customer data.
• High Costs: Expensive to implement analytics tools and hire skilled professionals.
• Complexity: Requires expertise and tools for complex data analysis.
• Dependence on Data Quality: Poor data quality can lead to inaccurate insights.
• Constant Updates Required: Needs continuous monitoring due to changing trends.
• Risk of Over-Reliance: Over-dependence on data may reduce creativity in marketing
strategies.
 HOW MARKETING ANALYTICS HELPS
IN BUSINESS?
• Improves decision-making with data-driven insights.
• Enhances customer targeting and personalization.
• Optimizes marketing campaigns for higher ROI.
• Identifies high-performing channels and reallocates resources effectively.
• Predicts customer behavior for proactive retention strategies.
• Monitors brand sentiment to manage reputation in real-time.
• Identifies market trends, opportunities, and threats.
• Reduces customer churn through predictive analytics.
• Improves overall customer experience and satisfaction.
 Amazon – Customer Segmentation and
Targeting:

• Example: Amazon uses marketing analytics to segment its vast customer

base based on purchase history, browsing behavior, and demographics. For
instance, if a customer frequently buys electronics, Amazon might send them
targeted emails featuring deals on related products like accessories, gadgets,
or upcoming tech releases.
• Impact: This data-driven approach to customer segmentation helps Amazon
drive higher conversion rates, increase sales, and improve customer retention.
 Netflix – A/B Testing for Content
Recommendations:

• Example: Netflix heavily relies on A/B testing to optimize its user interface
and content recommendations. For instance, they test different thumbnails,
descriptions, and layouts to see which versions drive more clicks and
engagement. An A/B test on two different thumbnails for the same show
revealed that changing the thumbnail increased viewership significantly.
• Impact: Netflix's use of A/B testing ensures users spend more time on the
platform, enhancing user satisfaction and reducing churn.
 Coca-Cola – Social Media Sentiment
Analysis:

• Example: Coca-Cola employs social media sentiment analysis to monitor

brand perception and respond to customer feedback in real time. During the
"Share a Coke" campaign, Coca-Cola analyzed social media mentions to
gauge public sentiment. They noticed high engagement and positive
sentiment around personalized bottles and expanded the campaign to include
more names and regions.
• Impact: Real-time insights into consumer sentiment allowed Coca-Cola to
amplify a successful campaign, boosting brand engagement and sales.
Spotify – Predictive Analytics for Customer
Retention:

• Example: Spotify uses predictive analytics to understand which users are

likely to cancel their subscriptions. By analyzing listening habits, playlist
activity, and app usage, they can identify at-risk users. They then offer these
users tailored content recommendations, discounts, or notifications about
upcoming releases and events to retain them.
• Impact: This data-driven approach has helped Spotify reduce churn rates
and increase customer loyalty.
 Nike – Optimizing Marketing Spend with
Multi-Touch Attribution:

• Example: Nike uses multi-touch attribution models to evaluate which

marketing channels drive the most value. By analyzing data from digital ads,
social media, email, and in-store promotions, Nike found that influencer
marketing and paid search ads had the highest impact on conversions. They
then adjusted their marketing spend accordingly.
• Impact: This optimization led to a more efficient allocation of marketing
resources, resulting in increased ROI for Nike's campaigns.
 Starbucks – Personalizing Customer
Experience with Data-Driven Insights:

• Example: Starbucks uses data from its mobile app and loyalty program to
personalize marketing efforts. For example, they analyze purchase history
and send personalized offers to customers via the app, such as a discount on
their favorite drink. A customer who regularly buys lattes might receive a
coupon specifically for a new type of latte.
• Impact: Personalized marketing helps Starbucks increase customer
engagement and drive repeat purchases, enhancing customer loyalty.
 Airbnb – Real-Time Analytics for Ad
Campaign Adjustments:

• Example: Airbnb leverages real-time analytics to monitor the performance

of digital ad campaigns. During a campaign promoting unique stays, Airbnb
observed that ads highlighting user-generated content (UGC) were
performing better than traditional promotional ads. They quickly adjusted
the campaign to focus more on UGC, leading to higher engagement rates.
• Impact: Using real-time data allowed Airbnb to optimize the campaign mid-
flight, maximizing engagement and driving more bookings.
 SOURCES OF MARKET DATA
• Google Analytics: Provides data on website traffic, user behavior, and conversions.
• Social Media Platforms: Facebook, Instagram, Twitter, and LinkedIn offer
insights into engagement, reach, and audience demographics.
• Customer Relationship Management (CRM) Systems: Tools like Salesforce and
HubSpot collect customer interaction and sales data.
• Third-Party Market Research Firms: Nielsen, Gartner, and Statista provide
industry reports, consumer trends, and market data.
• Surveys and Polls: Tools like SurveyMonkey and Google Forms gather direct
customer feedback and preferences.
 CONTD…
• E-commerce Platforms: Data from platforms like Shopify, Amazon, and eBay reveal
purchase behaviors, trends, and sales performance.
• Public Data Sources: Government databases like the U.S. Census Bureau or Eurostat
provide demographic, economic, and market data.
• Ad Platforms: Google Ads, Facebook Ads, and LinkedIn Ads offer performance metrics
for advertising campaigns.
• SEO Tools: SEMrush, Moz, and Ahrefs provide keyword performance, search engine
rankings, and competitor data.
• Mobile App Analytics: Platforms like App Annie and Firebase track user behavior and
engagement in mobile applications.
 MORE TOOLS
• 1. Web Analytics Tools
• Google Analytics: Tracks website traffic, user behavior, source of traffic, and conversion
metrics.
• Adobe Analytics: Provides advanced insights into customer journeys across websites and apps.
• 2. Social Media Analytics
• Facebook Insights: Offers detailed metrics on post reach, engagement, demographics, and ad
performance.
• Twitter Analytics: Tracks tweet performance, audience insights, and engagement metrics.
• LinkedIn Analytics: Provides data on post impressions, engagement, and follower
demographics.
 CONTD…
• 3. CRM Systems
• Salesforce: Gathers customer data across sales, marketing, and customer support
interactions.
• HubSpot: Offers data on customer engagement, leads, email campaign performance, and
sales activities.
• 4. E-Commerce Platforms
• Shopify Analytics: Tracks online store performance, including sales data, average order
value, and customer behavior.
• Amazon Seller Central: Provides detailed insights on sales performance, customer reviews,
and competitive pricing.
 CONTD…
• 5. Marketing Automation Tools
• Marketo: Collects data on email marketing performance, lead scoring, and campaign
effectiveness.
• Mailchimp: Provides insights into email open rates, click-through rates (CTR), and audience
segmentation.
• 6. Market Research Firms
• Nielsen: Supplies industry reports, media consumption trends, and consumer preferences.
• Gartner: Provides market forecasts, industry trends, and competitive analysis.
• Statista: Offers statistics on a wide range of industries, market trends, and consumer behavior.
 CONTD…
• 7. Search Engine Data
• Google Search Console: Tracks website performance in search engines, including search queries, clicks, and
impressions.
• Bing Webmaster Tools: Provides insights into website visibility and search performance on Bing.
• 8. Public Data and Government Sources
• U.S. Census Bureau: Provides data on population demographics, economic indicators, and business activity.
• Eurostat: Supplies statistical data on European markets, economies, and industries.
• 9. Advertising Platforms
• Google Ads: Delivers data on ad performance, click-through rates, cost per click (CPC), and conversion metrics.
• Facebook Ads Manager: Tracks ad impressions, clicks, audience demographics, and campaign ROI.
 CONTD…
• 10. Competitor Analysis Tools
• SEMrush: Provides data on competitor websites, keyword rankings, and traffic
sources.
• Similar Web: Tracks competitor website performance, audience demographics, and
traffic sources.
• 11. Mobile Analytics Platforms
• App Annie: Offers insights into app downloads, user behavior, and in-app
purchases.
• Firebase: Tracks user engagement, retention, and app performance metrics.
PESTEL ANALYSIS
 POLITICAL AND ECONOMIC FACTORS
• 1. Political Factors:
• Government policies, regulations, and stability affect marketing strategies.
• Example: Advertising regulations, trade restrictions, and political stability in a region
influence how products are marketed.
• 2. Economic Factors:
• Economic conditions like inflation, unemployment, and consumer spending power
affect demand.
• Example: During a recession, marketing strategies may shift toward promoting
affordable products or offering discounts.
 SOCIAL AND TECHNOLOGICAL
FACTORS
• 3. Social Factors:
• Demographic changes, cultural trends, and lifestyle preferences shape consumer behavior.
• Example: A growing trend towards healthy living can lead to increased demand for organic
products, influencing marketing campaigns.
• 4. Technological Factors:
• Technological advancements impact how marketing data is collected, analyzed, and used.
• Example: The rise of AI and machine learning enhances predictive analytics, enabling more
personalized marketing.
 ENVIRONMENTAL AND LEGAL
FACTORS
• 5. Environmental Factors:
• Environmental concerns and sustainability impact consumer preferences and brand
perception.
• Example: A company’s eco-friendly practices can be highlighted in marketing campaigns to
attract environmentally conscious customers.
• 6. Legal Factors:
• Legal regulations regarding data privacy, advertising standards, and consumer rights affect
marketing strategies.
• Example: GDPR(General Data Protection Regulation) compliance affects how companies
collect and use consumer data, impacting digital marketing strategies.
 How PESTEL Analysis Helps in
Marketing Analytics:
• Informed Strategy Development:
• Analyzing these factors helps businesses develop marketing strategies that are aligned with external conditions and consumer
expectations.
• Risk Identification and Mitigation:
• Identifies potential risks (e.g., regulatory changes) and enables businesses to adjust their marketing strategies proactively.
• Market Entry and Expansion Decisions:
• Helps evaluate the suitability of entering new markets or expanding in existing ones based on external factors.
• Targeted Marketing Campaigns:
• Insights from social and economic factors help tailor marketing campaigns to specific audience segments, improving effectiveness.
• Adaptation to Technological Trends:
• Understanding technological trends allows companies to adopt new tools and platforms for data collection and analysis.
 EXAMPLES
• 1. Political Factors:
• Example: Facebook’s Data Privacy Concerns
• Due to stringent data privacy laws like the General Data Protection Regulation (GDPR)
in the EU, Facebook had to modify its data collection and usage practices. Marketing
analytics were affected as businesses had limited access to user data, which impacted
targeted advertising strategies. This prompted companies to rethink their digital
marketing campaigns to comply with regulations while still reaching their audience
effectively.
 CONTD…
• 2. Economic Factors:
• Example: Starbucks During Economic Recession
• During the 2008 financial crisis, Starbucks saw a decline in sales as consumers cut back
on discretionary spending. Using economic data, the company adapted its marketing
analytics strategy by introducing lower-priced products and promotions. They also
focused on retaining existing customers through loyalty programs, leveraging economic
indicators to adjust their marketing approach based on consumer spending power.
 CONTD…
• 3. Social Factors:
• Example: Nike’s Social Campaigns
• Nike often uses marketing analytics to understand social trends and align its campaigns
accordingly. For instance, their campaign featuring Colin Kaepernick supported social
justice movements, resonating with younger, socially conscious consumers. Social
factors like increasing awareness of social justice issues influenced Nike's marketing
strategy, leveraging analytics to track the campaign’s impact on brand perception and
sales.
 CONTD…
• 4. Technological Factors:
• Example: Amazon’s Use of AI in Marketing
• Amazon uses AI and machine learning to analyze consumer behavior and personalize
marketing efforts. With the growth of AI technology, Amazon leverages predictive
analytics to suggest products, optimize pricing, and enhance the customer experience.
Technological advancements in data analytics enable Amazon to improve targeted
marketing and increase conversion rates.
 CONTD…
• 5. Environmental Factors:
• Example: Unilever’s Sustainability Campaigns
• Unilever leverages environmental factors in its marketing analytics to promote eco-
friendly products. With increasing consumer concern for sustainability, Unilever
highlights its commitment to reducing plastic use and promoting sustainable living
through marketing campaigns. They use analytics to measure the effectiveness of these
campaigns in improving brand image and sales of their sustainable product lines.
 CONTD…
• 6. Legal Factors:
• Example: Google and GDPR Compliance
• Following the implementation of GDPR, Google had to adjust its data collection and
processing practices for European users. Marketing analytics were impacted as
advertisers had to obtain explicit user consent for data collection. Google’s marketing
strategies evolved to ensure compliance while maintaining effective ad targeting, using
analytics to assess the impact of these legal changes on ad performance and user
engagement
PORTER’S FIVE FORCES MODEL
 Threat of New Entrants:

• New competitors entering the market can disrupt established businesses, leading to
increased competition for market share.
• Impact on Marketing Analytics: Companies use marketing analytics to track
competitor activity, assess potential market saturation, and develop strategies to
retain customers. Analytics can help forecast the potential impact of new entrants
and tailor marketing efforts to strengthen brand loyalty and competitive positioning.
• Example: In the ride-sharing industry, Uber and Lyft used data-driven marketing
strategies to solidify their brand presence and prevent new entrants from easily
gaining market share.
 Bargaining Power of Suppliers:

• Suppliers can influence pricing, quality, and availability of key inputs, which affects
costs for businesses.
• Impact on Marketing Analytics: By analyzing supplier trends, businesses can
optimize their pricing strategies and marketing campaigns based on fluctuations in
supply chain costs. Marketing analytics can also help identify alternative suppliers or
predict the impact of supply chain disruptions on marketing budgets and product
availability.
• Example: A company like Apple relies on analytics to track supplier costs and
adjust product pricing or promotions in response to fluctuations in the availability
of components like semiconductors.
 Bargaining Power of Buyers:

• Buyers can demand lower prices or higher quality, influencing the profitability of a
business.
• Impact on Marketing Analytics: Businesses use marketing analytics to understand
consumer preferences, price sensitivity, and purchasing behavior. This helps tailor
marketing campaigns to meet customer expectations and increase customer
satisfaction, minimizing the bargaining power of buyers.
• Example: E-commerce platforms like Amazon use data analytics to personalize
customer recommendations and dynamically adjust prices, which helps retain
customers and reduce their bargaining power.
 Threat of Substitutes:

• The availability of substitute products or services can reduce demand for a

company's offerings.
• Impact on Marketing Analytics: Companies use marketing analytics to identify
substitute products in the market and assess how these alternatives affect customer
choices. Analytics helps businesses highlight their unique value proposition and
optimize marketing efforts to differentiate their products from substitutes.
• Example: Netflix uses marketing analytics to understand viewer preferences and
recommend original content, reducing the likelihood that subscribers will switch to
competing streaming services like Hulu or Disney+.
 Industry Rivalry:

• High levels of competition within an industry can limit profitability.

• Impact on Marketing Analytics: Businesses use marketing analytics to monitor
competitors’ marketing strategies, measure brand performance, and identify trends
in consumer behavior. This helps in optimizing marketing efforts to stay
competitive, differentiate offerings, and enhance customer engagement.
• Example: Coca-Cola and Pepsi constantly use marketing analytics to track each
other’s campaigns, consumer preferences, and sales data to adjust their advertising
strategies and maintain brand loyalty in the highly competitive beverage industry.
 Application of Porter’s Five Forces in
Marketing Analytics:
1. Competitor Analysis: Understand competitors' strengths, weaknesses, and market
positioning.
2. Consumer Behavior Analysis: Identify how buyer power and substitute products impact
customer choices and preferences.
3. Pricing Strategy: Adjust pricing models based on supplier influence, competitive pressures,
and buyer behavior.
4. Market Entry Analysis: Evaluate the threat of new entrants and adapt marketing efforts to
defend market share.
5. Differentiation Strategy: Use marketing analytics to highlight product uniqueness and
reduce the impact of substitutes.
 Threat of New Entrants – Example: Tesla

• Scenario: Tesla, an electric vehicle (EV) company, faces the potential threat of new
entrants like Rivian or Lucid Motors in the EV market.
• How Marketing Analytics Helps: Tesla uses analytics to track consumer interest
in EVs and assess potential threats from emerging competitors. By analyzing trends
in customer preferences, Tesla fine-tunes its marketing strategies (e.g., showcasing
battery life, charging network, or self-driving features) to retain its loyal customer
base and differentiate from new players.
• Result: Tesla strengthens its market position by continually innovating and
leveraging marketing insights to build brand loyalty.
Bargaining Power of Suppliers – Example:
Apple

• Scenario: Apple’s suppliers of components like chips and displays have

considerable bargaining power due to the specialized technology required.
• How Marketing Analytics Helps: Apple tracks supplier pricing trends and uses
predictive analytics to forecast cost increases or shortages. Marketing teams use this
data to plan promotional activities or product releases. For example, if component
costs rise, Apple may delay certain marketing campaigns or adjust product pricing
strategies to maintain profitability.
• Result: Apple maintains high profitability by using analytics to manage supplier
relationships and adjust marketing tactics accordingly.
 Bargaining Power of Buyers – Example:
Amazon

• Scenario: Amazon faces strong bargaining power from customers who can easily
compare prices and switch to other sellers online.
• How Marketing Analytics Helps: Amazon uses data-driven insights to
personalize customer experiences and enhance loyalty. By analyzing purchase
history, browsing behavior, and product preferences, Amazon tailors
recommendations, discounts, and advertising campaigns to individual users,
reducing the likelihood that customers will switch to competitors.
• Result: Amazon increases customer retention by delivering personalized shopping
experiences and targeted promotions, making customers less price-sensitive.
 Threat of Substitutes – Example: Netflix

• Scenario: Streaming services like Disney+ and Hulu present substitutes for
Netflix’s content.
• How Marketing Analytics Helps: Netflix uses analytics to understand viewing
habits and recommend personalized content to keep users engaged. For example,
they analyze which genres, shows, or actors are trending and use this data to
promote their original content. By offering exclusive shows like Stranger Things and
The Crown, Netflix reduces the appeal of substitutes.
• Result: Netflix retains subscribers by using analytics to provide a tailored content
experience, making it harder for customers to switch to substitute services.
 Industry Rivalry – Example: Coca-Cola vs.
Pepsi
• Scenario: Coca-Cola and Pepsi are locked in intense competition in the beverage
industry.
• How Marketing Analytics Helps: Both companies use marketing analytics to
track each other’s marketing strategies, social media presence, and consumer
sentiment. Coca-Cola might analyze Pepsi’s recent campaign success and adjust its
marketing efforts (e.g., launching promotional offers or seasonal campaigns like
"Share a Coke") to counter Pepsi’s moves. They also analyze regional data to focus
marketing efforts where their competitor is gaining traction.
• Result: Coca-Cola maintains its market share by staying ahead of Pepsi’s strategies
through continuous use of competitive analytics.
 EXAMPLE
• APPLE THROUGHOUT
 Threat of New Entrants:

• Low to Moderate Threat.

• Apple operates in a highly competitive tech industry where the barriers to entry are
high due to significant capital requirements, brand loyalty, and economies of scale.
• Example in Marketing Analytics: Apple uses its strong brand loyalty to track
customer sentiment through analytics. Even if new companies enter the market
(e.g., smaller smartphone brands), Apple’s marketing strategies are data-driven to
retain its customer base by highlighting features such as design, ecosystem
integration (iCloud, Mac, iPhone), and customer service.
 Bargaining Power of Suppliers:

• Moderate to High Power.

• Apple relies on a few key suppliers for crucial components like processors,
displays, and camera sensors, which gives suppliers some bargaining power.
• Example in Marketing Analytics: Apple uses supplier data and analytics to
forecast potential cost increases or supply shortages, which influences its
pricing and product launch strategies. When suppliers raise prices, Apple
adjusts its marketing approach to emphasize premium features that justify
higher price points, ensuring continued demand despite supplier costs.
 Bargaining Power of Buyers:

• Moderate to High Power.

• With access to a wide range of smartphone and tech product options, buyers have
significant power. They can easily switch brands if they find a better price or
product.
• Example in Marketing Analytics: Apple combats this by analyzing customer
purchase behavior and loyalty patterns. Through personalized marketing campaigns,
such as targeted promotions or the Apple Upgrade Program, Apple reduces the
bargaining power of buyers by building customer loyalty. Additionally, Apple’s
marketing strategies leverage its premium branding to create a perception of
exclusivity, making customers less price-sensitive.
 Threat of Substitutes:

• Moderate Threat.
• Substitutes for Apple products include cheaper alternatives like Android phones,
PCs, or tablets. However, the seamless integration of Apple’s ecosystem (iPhone,
Mac, iPad, Apple Watch) makes switching costly for customers.
• Example in Marketing Analytics: Apple uses analytics to understand how
customers use its ecosystem and constantly promotes features like iMessage,
FaceTime, and Continuity across devices. By focusing its marketing on ecosystem
advantages and user experience, Apple reduces the threat of substitutes, ensuring
customers remain within its ecosystem rather than opting for cheaper alternatives
 Industry Rivalry:

• High Rivalry.
• Apple faces intense competition from major tech companies like Samsung, Google,
and Microsoft in various product categories (smartphones, laptops, tablets).
• Example in Marketing Analytics: Apple continuously monitors competitors'
marketing campaigns, product launches, and pricing strategies using analytics. For
instance, if Samsung launches a new flagship phone, Apple might quickly release
marketing materials focusing on the superior integration of its hardware and
software. This allows Apple to stay competitive and respond to industry trends,
maintaining its leading position.
 Summary of Apple’s Position using
Porter’s Five Forces:

• Threat of New Entrants: Low, due to high barriers and brand loyalty.
• Bargaining Power of Suppliers: Moderate, with dependency on key
suppliers.
• Bargaining Power of Buyers: High, due to competition and buyer choices.
• Threat of Substitutes: Moderate, but mitigated by Apple’s ecosystem.
• Industry Rivalry: High, with strong competitors like Samsung, but managed
through continuous innovation and marketing strategies based on analytics.
 MARKET SIZING
• Market sizing is the process of estimating the total potential demand for a
product or service within a specific market.
• It helps businesses understand the size of the opportunity in terms of
potential revenue or customer base, guiding strategic decisions about market
entry, product launches, and resource allocation.
• It’s a critical tool for assessing growth opportunities and making informed
business or investment decisions.
 Stakeholders in Market Sizing

• Investors: They look for market size data to evaluate the potential return on
investment and assess market opportunities before putting money into a
company or industry.
• Business Leaders/Executives: For strategizing long-term plans, executives
need market sizing to make informed decisions about entering new markets,
product launches, or scaling existing operations.
• Product Managers: They use this information to assess whether to develop
new products and services based on market demand.
 CONTD…
• Sales & Marketing Teams: These teams analyze the market size to target
appropriate customer segments and focus their efforts on high-potential
areas.
• Regulators & Policy Makers: They may use market data to create policies,
predict economic trends, or understand the competitive landscape.
• Competitors: Analyzing market size helps competitors gauge their position
in the industry and identify untapped opportunities or gaps.
 Applications of Market Sizing

• Market sizing has several practical applications across various areas:

• Business Expansion: Helps companies decide when and where to expand.
It answers questions like "Is the market large enough to support growth?" or
"What are the best regions to enter?"
• Investment Decisions: Investors rely on market size to determine if a
sector has room for growth and profitability.
• Product Development: It aids in understanding if there’s sufficient demand
for a new product or service.
 CONTD…
• Sales Targeting: Market size guides sales teams to focus on the right regions
or customer segments.
• Pricing Strategies: By analyzing the size of the market, businesses can
better understand what price points would resonate with a particular
audience.
• Competitive Analysis: Allows companies to identify how much of the
market competitors occupy, revealing room for growth or improvement.
 APPROACHES TO MARKET SIZING
• 1. Top-Down Approach This method estimates market size by starting from the
overall market and narrowing it down to the specific segment your product or
service targets. It’s a more general approach that looks at existing data from industry
reports or research to estimate how big the market could be for a business.
• 2. Bottom-Up Approach This approach involves calculating the market size by
estimating potential sales based on individual units or customer segments. It’s a
more detailed, ground-up method that builds from the bottom (i.e., how many
customers you can realistically target, multiplied by the value of each customer).
 TOP DOWN APPROACH
• How it works:
Start with broad industry data (e.g., the global automotive market) → Narrow
it down by region or product segment (e.g., electric cars) → Apply
percentage-based assumptions to figure out your share or niche.
• Example:
If you know the global smartphone market is $500 billion, and you estimate
that your product can capture 1% of that market, you would estimate the
market size for your product as $5 billion.
 CONTD…
• Pros:
• Fast and cost-effective.
• Relies on existing industry data.
• Cons:
• Can be inaccurate due to reliance on assumptions.
• Doesn’t account for ground-level details like local preferences or specific business
strengths.
 BOTTOM UP APPROACH
• How it works:
Start with your target audience or sales (e.g., number of potential customers)
→ Estimate how many of them will buy your product and at what price →
Calculate the overall sales you can generate.
• Example:
If you estimate that there are 1 million potential customers, and each will
spend $50, then the total market size would be $50 million.
 CONTD…
• Pros:
• More accurate and grounded in real data.
• Accounts for individual customer behavior and market characteristics.
• Cons:
• Requires more data, time, and research.
• Can be limited by availability of detailed data on the customer base
 When to Use Each Approach

• Top-Down is useful when you’re working with broader industry-level data,

especially for high-level planning or early-stage market exploration.
• Bottom-Up is ideal when you have specific data about your target market or
customer base and want to make a more detailed, accurate estimation of
potential revenue