- name
- market-sizing
- description
- Estimate market size using top-down, bottom-up, and triangulation methods. Use for market entry decisions, business planning, investment analysis, and TAM/SAM/SOM calculations.
Market Sizing
Metadata
- Name: market-sizing
- Description: Market size estimation with multiple methodologies
- Triggers: market size, TAM SAM SOM, market estimation, addressable market
Instructions
You are a market analyst estimating the market size for $ARGUMENTS.
Your task is to provide a defensible market size estimate using multiple methods and triangulation.
Framework
Market Definition Hierarchy
┌─────────────────────────────────────────────┐
│ TAM │
│ Total Addressable Market │
│ "Every possible customer globally" │
│ │
│ ┌───────────────────────────────────────┐ │
│ │ SAM │ │
│ │ Serviceable Addressable Market │ │
│ │ "Customers we can reach" │ │
│ │ │ │
│ │ ┌─────────────────────────────────┐ │ │
│ │ │ SOM │ │ │
│ │ │ Serviceable Obtainable Market │ │ │
│ │ │ "Realistic market share" │ │ │
│ │ └─────────────────────────────────┘ │ │
│ └───────────────────────────────────────┘ │
└─────────────────────────────────────────────┘Three Estimation Methods
1. Top-Down (Shave Off)
Start with known total, subtract irrelevant segments.
Example: Global archive footage market
$6B Global visual content market
-$4B Less primary content (not archive)
$2B Secondary visual content market
-$1.8B Less non-footage (images, graphics)
$200M Archive footage market
-$120M Less non-news footage
$80M Archive news footage market
-$72M Less non-digitized
$8M Digitized archive news footage2. Bottom-Up (Build Up)
Aggregate segments to total.
Example: US coffee shop market
Number of coffee shops: 35,000
Average daily customers: 300
Average spend per visit: $5
Operating days per year: 300
Market = 35,000 × 300 × $5 × 300 = $15.75B3. Triangulation (Cross-Check)
Use multiple sources to validate.
┌─────────────┐ ┌─────────────┐ ┌─────────────┐
│ Top-Down │ │ Bottom-Up │ │ External │
│ $100M │ │ $95M │ │ $110M │
└──────┬──────┘ └──────┬──────┘ └──────┬──────┘
│ │ │
└───────────────────┼───────────────────┘
│
┌──────┴──────┐
│ Range: │
│ $95-110M │
│ Best: $102M│
└─────────────┘Sanity Checks
- Confidence Ranging - Narrow estimates to a reasonable range
- Feel-Right Test - Does this make intuitive sense?
- Materiality Test - Are differences material to the decision?
- Impact Criticality - Does this change the strategic conclusion?
- Body Doubling - Cross-check with independent source
Output Process
- Define the market - Clear boundaries and scope
- Choose methods - Use at least two approaches
- Gather data - Research, interviews, reports
- Calculate - Work through each method
- Triangulate - Compare and reconcile
- Sensitivity test - Key assumption impact
- Present with confidence - Range, not single number
Output Format
## Market Sizing: [Market Name]
### Market Definition
**Scope:**
- Product/Service: [What's included]
- Geography: [Regions covered]
- Customer Type: [B2B/B2C, segments]
- Time Period: [Current year / projection]
**TAM/SAM/SOM Definitions:**
- **TAM:** [Definition] = $X B
- **SAM:** [Definition] = $Y B
- **SOM:** [Definition] = $Z B
---
### Method 1: Top-Down
$XX B [Starting point - total market] -$X B [Deduction 1: reason] $XX B [Intermediate 1] -$X B [Deduction 2: reason] $XX B [Intermediate 2] -$X B [Deduction 3: reason] $XX B [Target market size]
**Key Assumptions:**
- [Assumption 1]: X% of parent market
- [Assumption 2]: Y% ratio
**Result: $X B**
### Method 2: Bottom-Up
[Segment A] Players: X × Avg revenue: $Y = Subtotal: $Z
[Segment B] Players: X × Avg revenue: $Y = Subtotal: $Z
TOTAL = $X B
**Key Assumptions:**
- [Assumption 1]: Number of players
- [Assumption 2]: Average revenue per player
**Result: $X B**
### Method 3: External Sources
| Source | Estimate | Year | Methodology |
|--------|----------|------|-------------|
| [Source 1] | $X B | 2024 | [Notes] |
| [Source 2] | $X B | 2024 | [Notes] |
| [Source 3] | $X B | 2023 | [Notes] |
**Result: $X B (average)**
---
### Triangulation
| Method | Estimate | Confidence |
|--------|----------|------------|
| Top-Down | $X B | High/Medium/Low |
| Bottom-Up | $X B | High/Medium/Low |
| External | $X B | High/Medium/Low |
**Reconciled Estimate: $X B (Range: $Y-Z B)**
### Sensitivity Analysis
| Assumption | Base Case | Low Case | High Case |
|------------|-----------|----------|-----------|
| [Assumption 1] | X% | Y% | Z% |
| [Assumption 2] | X | Y | Z |
| **Market Size** | **$X B** | **$Y B** | **$Z B** |
### Growth Outlook
| Metric | 2024 | 2025 | 2026 | 2027 | 2028 |
|--------|------|------|------|------|------|
| Market Size | $X B | $X B | $X B | $X B | $X B |
| Growth Rate | X% | X% | X% | X% | X% |
| CAGR | - | - | - | - | X% |
### Key Findings
1. [Finding 1]
2. [Finding 2]
3. [Finding 3]Tips
- Always use at least two methods for credibility
- Document all assumptions - you will be challenged
- Use ranges, not single numbers
- Clearly distinguish TAM, SAM, and SOM
- Consider market maturity - growth rates vary by stage
- Check for double-counting in bottom-up approaches
- Verify data sources - not all research is equal
- Update regularly - markets change
- Be explicit about what's included/excluded