Market analysis: Understand markets – unearth potential

To quantify the market potential, we use scientifically recognized methods that have been tried and tested in practice as part of a market potential analysis. As a rule, we use at least two alternative methods to achieve the most valid results possible. Depending on the respective focus market, we select the most suitable methods to assess potential, including:

Top-down method

The Top-Down approach calculates market potentials based on available macro data that are influencing the specific potentials.

Example: The global amount of processed waste water can be used as macro figure for deriving the potential of waste water processing equipment, like e.g. pumps, filters, centrifuges and compressors.

Bottom-up method

The Bottom-Up approach looks at the individual sources of demand for the product or service in question and sums up their demand to a potential on segment, country or global level.

Example: The typical demand of a medium size medical lab for laboratory equipment can be multiplied with the total number of same-size labs in a market to calculate the equipment potential for this laboratory market segment.

Comparison of the competition

The competitor approach collects turnover  data from comparable competitors to estimate the overall market potential. This works especially well, if the business of the competing companies is clearly focused on one type of business and if the number of relevant competitors is limited.

Example: For determining the potential of the vehicle market, the relevant turnover of the 20 biggest vehicle manufactures can be researched, made comparable and be summed up.

Derivation of supplements and substitutes

The supplements and substitute approach aims to deduct market potentials for one product or service from the – ideally – already documented potential of another product. The two products need to have a logical relationship to each other.

Example: The potential for ink cartridges can be derived from the number of ink printers that are installed in the market.

When identifying trends, we consider all factors that influence the development of the targeted market or acceptance of a product to be launched. The assessment of future regulations plays just as important a role as the appraisal of economic and political framework conditions, technological progress and social demographic changes. We always carry out such an analysis while taking into account country- and market-specific particularities.

We create a clear picture of the market situation from the customer’s perspective and on the basis of a targeted analysis. The determination of customer behavior in the target market serves as the basis for this. This way, we provide valuable insights into customer segmentation, willingness to pay and requirements that are placed on new products, for example. Both qualitative and quantitative methods are used. Apart from interviews with target customers and market experts, relevant market reports and current research results from science are also included in the survey, for example.

Relevant primary and secondary data are collected and evaluated in order to carry out a competitive analysis. The product of such a competition analysis is, for example, a description of the macro competition landscape or a detailed evaluation of the strengths and weaknesses of individual competitors and their products.

Consequently, the market analysis provides answers to a large number of critical questions with regard to the target market or the product to be launched:

• What is the market potential?  Which sales can be expected?
• How large is the market volume? How will the market develop in the coming years?
• Which influencing factors determine the future market development?
• What characterizes the market? What barriers to market entry are to be expected?
• Which requirements (e.g. price readiness) do the customers have and on what do they depend?
• What is the competitive environment like?