Find out how to search for independent information and statistics about the potential markets for your idea and what share of the market is possible for your technology.
Step 1 – Quantifying the Market Potential
The internet is your best source of data to quantify your potential market. Depending on what you determined your markets to be, this information may not be easy to find given that there are 5 billion web pages on the internet and that your information must come from a referenced source. The problem is that most internet sites are simply information that somebody has put on the web.
You need to find a credible reference source in order for investors and project partners to take you seriously. As mentioned in previous articles, development agencies are a great resource for access to market data that comes from a reliable source that you can reference.
The website wrongdiagnosis.com is for finding statistics for medical conditions such as Type II Diabetes. The number of people diagnosed with a condition is called the prevalence and the number of new diagnoses of the condition each year is called the incidence. The data is based on statistics for the USA by the Center for Disease Control but can be extrapolated for other markets if you cannot get specific information.
If you cannot find a legitimate source for your market figures, the next best step is to find a widely quoted figure that is used by reputable companies or organisations. You can put the figure back into an internet search but be wary of other websites that have simply plagiarised the figure without checking its authenticity.
Step 2 – Assessing the Market Penetration
Review the patent competition assessment form in your initial evaluation document to refresh yourself of the novel aspects of your ideas and their potential benefit to your end user. Consider the current state of the market to determine whether the final product you develop will be quickly adopted by the market or will be a slow burner and only be purchased by early adopters and take years to become accepted by your market place.
If your idea is an improvement on existing technology, say a smart phone for example, then your market will have identified the faults in their current mobile phone that they can’t access the internet, their email or social media platforms on the go or will appreciate the benefit of this functionality when told about it. Therefore, knowing that there was such a large market for mobile phones and a willingness to have additional functionality meant that smart phone developers knew they would get a large share of the mobile phone market with their novel technology.
On the other hand, when Martin Cooper of Motorola developed the first practical handheld mobile phone in 1973 it weighed nearly a kilogram, earning it the nickname “The Brick”, and cost a staggering $3,995, equivalent to $20,000 today, The battery lasted 30 minutes and took 10 hours to recharge. It took 10 years and not only significant improvement to the mobile phones themselves but the creation of cellular networks that eventually covered cities, then countries and then continents, making mobile phones the lucrative market it is today. The number of mobile phone devices was meant to surpass the global population in 2012 making mobile phones the most prevalent consumer product in the world. It can often be very persuasive to get an evaluation from an independent expert in the particular market that your technology serves to give their opinion and endorse the findings from the market and market penetration evaluation.
Example- Improvements to Existing Technology
If you have an iterative technology, which is technology that improves on existing technology, then it is a relatively straight forward case of determining the existing market and then identifying the unique selling points for your innovation to estimate the percentage penetration of that market. Sony are a great example of an innovative company who develop iterative technology with their customers in mind. Their ground breaking decision to make their technology backwards compatible was a big hit with their customers.
The Blu-Ray DVD player plays both standard DVDs and Blu-Ray DVDs so that their existing customers and new customers did not have to buy their favourite movies in another format. Given the costs of purchasing DVDs and Blu-Ray DVDs to play in the player can quickly surpass the cost of the player itself, this capability to play both formats was much appreciated by their customers.
The same principles were applied by Sony to their Playstation games console where the Playstation 2 and the Playstation 3 were backwards compatible and could play every Playstation game ever made and the Playstation 3 could even play Blu-Ray DVDs and could connect to the internet making it an entertainment unit instead of just a games console.
Where possible, you should use credible sources of information about market sizes and independent opinion about market penetration for your idea that endorses your own conclusions about the market penetration. These are the types of facts and opinions that will be independently assessed by any investor that you approach and the reliability of the information that you provide them will add credibility to you and your pitch.
Smart Idea Store
December 14, 2012