How to Size an Emerging Market

Comments (20)

How to Size an Emerging Market

By: Dave Lavinsky

In developing their business plans, companies of all sizes face the challenge of determining the size of their markets. To begin, companies must present the size of their "relevant market" in their plans. The relevant market equals the company's sales if it were to capture 100% of its specific niche of the market. Conversely, stating that you were competing in the $1 trillion U.S. healthcare market, for example, is a telltale sign of a poorly reasoned business plan, as there is no company that could reap $1 trillion in healthcare sales. Defining and communicating a credible relevant market size is far more powerful than presenting generic industry figures.

The challenge that many firms face is their inability to size their relevant markets, particularly if they are competing in new or rapidly evolving markets. On one hand, the fact that the markets are new or evolving is the reason why there may be a large opportunity to establish them and become the market leader. Conversely, investors, shareholders and senior management are often skeptical to invest resources because, since the markets do not yet exist, the markets may be too small, or not really exist at all.

In developing over 200 business plans for emerging ventures, venture capital firms, SMEs and Fortune 500 spinouts, Growthink has encountered the challenge of sizing emerging markets numerous times and has developed a proprietary methodology to solve the problem.

To begin, it is critical to understand why traditional market sizing methodologies are ill-equipped to size emerging markets. To illustrate, if a research firm were to use traditional methods to size a mature market such as the coffee market in the United States, it would consider demographic trends (e.g., aging baby boomers), psychographic trends (e.g., increased health consciousness), past sales trends and consumption rates, price movements, competitor brand shares and new product development, and channels/retailers among others. However, conducting such an analysis for emerging markets presents a challenge as several of these factors (e.g., past sales, demographics of the customer when there are no current customers) don't exist because the markets are presently untapped.

The methodology required to size these new markets requires two approaches. Each approach will yield a different approximation of the potential market size, and often the figures will work together to provide a solid foundation for the market's potential. Growthink calls the first approach "peeling back the onion." In this approach, we start with the generic market (e.g., the coffee market) that that company is trying to penetrate, and remove pieces of that market that it will not target. For instance, if the company created an ultra high-speed coffee maker that retailed for $600, it would initially reduce the market size by factors such as retail channels (e.g., mass marketers would not carry the product), demographic factors (lower income customers would not purchase the product), etc. By peeling back the generic market, you eventually will be left with only the relevant portion of it.

The second methodology requires assessing the market from several angles to approximate the potential market share, answering questions including:

  • Competitors: who is competing for the customer that you will be serving; what is in their product pipeline; once you release a product/service, how long will it take them to enter the market, who else may enter the market, etc.
  • Customers: what are the demographics and psychographics of the customers you will be targeting; what products are they currently using to fulfill a similar need (substitute products); how are they currently purchasing these products; what is their degree of loyalty to current providers, etc.
  • Market factors: what other factors exist that will influence the market size - government regulations; market consolidation in related markets, price changes for raw materials, etc.
  • Case Studies: what other markets have experience similar transformations and what were the customer adoption rates in those markets, etc.

While these methodologies are often more painstaking than traditional market research techniques, they can be the difference in determining whether your company has the next iPod or the next Edsel.

About The Author

As President of Growthink, Dave Lavinsky has helped the company become one of the premier business plan development firms. Since its inception, Growthink has developed over 200 business plans. Growthink clients have collectively raised over $750 million in financing, launched numerous new product and service lines and gained competitive advantage and market share. For more information please visit


alexios_hellas 26.09.2007. 02:57

When approaching emerging markets, do you prefer growth or value countries? Without regard to individual companies, on the macro, no two emerging markets are alike. That being so, in general (i.e. regardless of size, population, GDP), when you are looking for a country in which to invest, do you prefer countries that have a more established market, like a Brazil, Poland, or Russia, and can offer more of an "emerging value" atmosphere, or do you prefer a less established market, like a Bulgaria, Peru, or Georgia, which can offer more of an overall growth potential as the market becomes more developed? I'm really anxious to discuss this topic at length, so I would be glad to offer more information if required.


Admin 26.09.2007. 02:57

This is a great question, and I fear my answer may not completely resolve it. But I can offer a few thoughts. First, as a "GARP" investor, I always look for Growth at a reasonable price, so I disavow the false choice between value and growth. I want both.

As far as established markets go, the advantage of an established market is that it has better liquidity and is more likely to attract a following. Stocks in Bulgaria, or Georgia, for example, are virtually unknown to traditional investors, and therefore will be harder to move in downtimes. If you're holding for the long-term, that shouldn't matter a great deal, but there's always an advantage in being able to sell something when you need to. Personally, I'd put Peru in a category with Poland, and perhaps countries like Turkey, in that they are fairly well followed, but not fully. This is the mid-range. Perhaps this is the best range, because if they become more fully followed, this is where your prices will rise fastest. I think everyone is already following the BRIC countries, while places like Poland and Peru offer opportunity now, as does Mexico, I believe, to grab the next wave of investment money. Bulgaria is still a few years away, so unless you've found a really outstanding growth company that you are confident will keep growing for years, it might be best to wait.

Finally, I look very closely at the political situation and society in general to determine if it's a nation I dare to invest in. Here, I find myself much more confident investing in Bulgaria than Georgia, for example, because I'm not as confident that Georgia's political status is fully safe, while Bulgaria is more stable in that way, I believe. So, I'd consider a good long-term growth holding in Bulgaria, while I'd probably avoid Georgia for now, despite what I think are probably outstanding opportunities.


Freely 23.03.2013. 18:03

Are China's economic policies, particularly state-owned-enterprises fair to rest of the world? Economic liberalisation slowing in China: OECD

AFP News ? Fri, Mar 22, 2013

Economic liberalisation has slowed in China, the OECD said in a major report Friday, urging the country's Communist rulers to step up efforts to level the playing field for state-owned and private firms.

A long-standing commitment to looser control has boosted productivity and efficiency in the economy, the Organisation for Economic Cooperation and Development said in its Economic Survey of China.

But progress on opening up has stalled since 2008, the advanced economies' policy forum said, as Beijing relied on big-ticket government projects to ward off the impact of the global financial crisis.

China's leaders have repeatedly pledged to refocus the economy towards domestic consumer demand, rather than relying on exports and infrastructure investments.

But the OECD report said: "Economic liberalisation has lost momentum in the past four years. The reduction in the size of the state-owned sector came to an end in 2008."

China ranked 91st for ease of doing business in the World Bank's latest survey of 185 economies, ahead of some emerging markets but far behind most OECD countries, the report said.

Chinese authorities should avoid creating new "national champions" in industries it has promised to actively promote as strategic emerging sectors over the next few years and remove policy impediments to investment, it added.

"Undue industrial policy activism would stifle competition and work against other government objectives, including promoting the role of private enterprise," said the report.

The government also needed to renew action to privatise state-owned enterprises (SOEs) in rail, postal services, publishing and other sectors, while its ownership of SOEs' listed arms should be made more transparent, it added.

OECD Secretary-General Angel Gurria warned the competitive edges Chinese SOEs enjoy may become a "looming" bone of contention between China and the West as they expand overseas.

"If you have a country where those companies are not taxed, don't pay dividends, are not subject to controls or whatever and they go out and do competition with countries that do, then there is not a level playing field," he told a news conference.

"New reforms are needed to increase the competitive pressure on those firms."

China, which has the world's biggest foreign exchange reserves at $3.31 trillion, is keen to promote overseas investment and acquire foreign resources and technologies as part of the efforts to reform its growth model.

The world's second-largest economy expanded 7.8 percent in 2012, its worst performance for 13 years, in the face of weakness at home and in key overseas markets.
@ Dog Lover/CCP's mentality and ethical standard are both wrong and wicked, to allow state owned enterprises (SOEs) tax-free and do whatever they like in order to put all other companies an uncompetitive and unfair positions. SOEs in China are mostly monopolies in the industry they are in, regardless how inferior their services and products are ie polluted fuel and the lousy Chinese banks, Chinese People just have to tolerate. SOEs' inferior products and services are filtering everywhere in the world with an aim to wipe out all competitors, sometimes though they reap what they sow, the near collapse of solar giant Sintech is a good example.

The unfair trade practices encourage the huge rich and poor gap by allowing SOEs' salaries equivalent to Hong Kong's and the US' while vast majority Mainlanders are only making 1,000 - 2,000 Yuan a month.
The "Choose Best Answer" function is working in here again?
WNL will have my Best Answer with remarks as follows, Sailor8's also great, wish I could give 2 BAs.

SOEs are unethical & wicked, much worse than Wal-mart, they act & behave like emporers doing whatever they want. "Ameri-West" is a more fair level playing field with everyone bind by more or less taxes/rules/competitions, no one is given priority above others. CCP love abusing Chinese, SOEs are CCP's abusive tools not only to Chinese but to the whole world.


Admin 23.03.2013. 18:03

I see it as no less fair than Wal-Mart using below cost pricing on specific items targeted at putting local companies out of business during its expansions into new territories.

Wal-Mart is the puppet company of the CCP that put so many American communities into economic disaster by "Offering 150 NEW JOBS!" (most at minimum wage), while simultaneously selling cheap crap from China that you have to frequently replace, and putting higher quality small businesses into bankruptcy. They didn't come to assist local people... they came to bury them in BS, just like the CCP does.


wildbuzz65 19.07.2012. 14:48

What would be a decent replacement for the 2 "not so good" following Mutual Funds? Legg Mason Batterymarch Emerging Markets Trust (LMEMX)
Blackrock large cap
We would like similar size funds. Any ideas to replace these poor performers would be appreciated.


Admin 19.07.2012. 14:48

Look at the Vanguard index fund equivalents for the lowest costs in the industry.

S&P 500 Index: VFINX. Admiral Shares and ETF also available.
Emerging Markets: VEIEX. Also available as Admiral Shares (lower cost, higher min) and ETF.

Fidelity is another good firm. T. Rowe Price is particularly good for international funds.


Father G 15.02.2007. 05:41

How do I figure a fair salary for a unique position? I'm currently being sought after to work on the core creative team of a relatively small (but very profitable) business. (They're actively pursuing me, I didn't approach them.) The job involves creative writing, brainstorming new products (and possibly new business ventures), developing marketing strategies, and a host of small creative tasks. The position isn't comparable to others I've seen in the job market, so I'm not sure how to figure a fair salary. They've offered $60k, but I have a hunch it might be a lowball number. Would it be crazy to come back with a figure of $80 to $90k? I don't want to appear greedy, but at the same time, I know I would be a valuable commodity to their organization. They're clearly very interested in me, and there aren't many folks with the particular creative talents I have to offer. Any thoughts?
artemisaodc1 - For sites like, you need a common position title. Without that, they have no way of doing salary comparisons.

Father G

Admin 15.02.2007. 05:41

I have worked in HR for many years.

I have never given a potential new hire an offer that was not competitive for the industry. Low balling is really not something that happens when HR is involved, unless it is an old-time industry like manufacturing or shipping. That being said, depending upon our analysis of capabilities depending upon experience and interview "wow factor," we might shoot out an offer that is on the lower end of competitive.

If I were to give someone a 60K offer, I would be willing to consider maybe a 5-10% increase, but only if the candidate is perfect for us and we don't think that we could find anyone else to do the same job. To hear that a candidate wanted a full 3-40% increase on the initial offer would probably not fly, and we might even let the candidate go, because they clearly care more about the money than the work that they are performing, particularly in the context of marketing, where drive is everything.

I have developed positions that are quite a bit more complicated and unique than this, and still been able to find comparables via breaking out the role into 3-5 different more common jobs. In this case, "Copy Writer," "Emerging Markets Manager," and a mid-level "Marketing Manager." Calculating percentage of total work for each of these jobs, and weighting appropriately provides a number.

If you know how to weight this job, then you can find information online, such as, or even ask the recruiter to provide the comp data used to price out the job. (Variables to find in analysis of comperative competitives include the industry, the size of the company, how current the data is, and the general culture of the company (including benefits)).

Good luck!


Kempiet 08.05.2011. 12:43

Whats a good starting amount to enter the stock market? I have 1000 that i want to use to slowly start developing a stock market portfolio.

is this a reasonable amount or should i consider using more?

what are some tips on not instantly losing money, are there any safe bets? or a slow rising investment that i can see a good dividend return in a year?

just need some tips, thanks


Admin 08.05.2011. 12:43

Investing 1000 is a decent sized amount. But you are asking questions that only you can truly answer. You should typically have about 6 months of living expenses in savings in case something terrible happens.
You need to consider what you are investing for. Different people have different goals. Is it for more income? For retirement? For someone's education? Plus how old are you and how long do you want to invest? How much risk are you willing to assume?
These are all very critical questions and they will determine what kind of investments are right for you. Don't believe anyone who has a "one size fits all" kind of investment. For stocks typically you are talking about at least a 5 year investment period. If less, consider getting into bonds or a bond fund instead. Many people choose an appropriate mix of the two.
If you want to get into the market but don't know what stock to pick, consider an index fund or ETF. Instead of throwing all your eggs into one basket (one company), index funds can invest you in dozens, hundreds, or thousands of companies all at once and so there is less risk. This protects you if any one company or industry runs into trouble. For bonds, the returns are less, but more solid. There are more conservative stock funds like the Total Stock Market or S&P500 or more aggressive ones like small or mid-caps, sector specific ones like Energy, and regional ones like the European or Pacific Index, or Emerging Markets. You could see good growth in a year, but there is no guarantee and all stocks have risk. The more time you have, the more risk you can take on since you have a chance to recover if the market declines. But again, only you can decide for yourself how much of a roller coaster you are willing to ride on.
Start with some basic books to teach you the fundamentals. Two excellent reads are The Complete Idiot's Guide to Investing and Investing for Dummies. You may find them in your local library.
You need to learn also some important concepts in investing, such as pound-cost averaging and compound interest - two of your best friends to make money for the future.
Do some reading online such as
for some important investment truths.
Good luck.


Joe kickass. 16.03.2009. 22:09

How much should I sell my artwork for? Like Say I make a picture, How much should I sell it for, Does it matter the size, color, effect? Any ideas on how to price artwork?

I have a picture I want to sell for a bit of money, though Iunno what my starting price should be, I mean I do expect a bit.
Yeah, I know that, it's just I worked so hard on it, and I'd rather have for what it's worth.

Joe kickass.

Admin 16.03.2009. 22:09

Pricing art is perhaps the second most difficult aspect of creating art, right behind choosing a title! The best way to price one's own art is to see what similar works are going for in your area. Some of the criteria that goes into setting prices may be:

1. Size . . . and yes, some artists do charge by the square inch!
2. Skill and creativity
3. Medium . . . well-executed oils will command higher prices than marker art
4. Subject matter . . . some genres sell better than others
5. Presentation: is it framed, on a clean stretched canvas with finished edges, or is it a piece of paper with art on it?
6. What is your target market?

A painting of a horse in the middle of horse territory, for example, will sell if it is accurately drafted, well-executed, and depicts the essence of the horse-culture. Poorly drawn, weakly colored, and out of context work will not sell as well. Likewise if your picture is of a motorcycle, you will want to target riders or owners as your potential buyers, but be aware that like horse people, they will be looking critically at how well you drew your subject.

Abstract is a little different, and tends to be dependent on the eye of the beholder. If your composition and colors are good, it may catch eyes more easily than if it is random and weak.

When you say a "bit of money" does this mean you are imagining a high price? If so, better have the work to demand it in this economy, because artists have begun to gear both what they produce and how they sell to the contracting cultural pocketbook.

As a new emerging artist I set my first prices slightly lower than my peers until I sold several pieces. I then began to assess their values by time, subject, excellence, and presentation. It would help to know what kind of painting/drawing you have created, even a picture would help. But absent that much information, the best I can tell you is to look around and set your price somewhat in line with what you see hanging in galleries and coffee shops in your area. Too low, you won't be taken seriously, and too high and you will not sell, and may chance being scoffed at.

Like I said, besides wracking one's brain for titles, pricing is the biggest challenge many artists face . . .


woodyboy12 28.01.2008. 22:28

Stock market crash implifications to the economy? i was wondering due to the stock market fall of 5% what implications would this have to the economy?


Admin 28.01.2008. 22:28

it is an very interesting question.

Basically recession in economy is fueling the stock market crash and not other way round.

If there is market crash, it affects indivudual interest - some people gain and others stand to lose. In bear market you are permitted to sell the stock at higher price and then buy at lower price - make a killing - do people always lose in bear market. One can make every happending as opportunity to become rich - none prevents.

to the extent the stock valuation comes down overall capitalisation of market only comes down, the excess fat (Money) lost in stock market (say 600 or 900 billions) where it get disappeared. they go no where - it will be well within the economy. From stock equity market - it may go to commodity market or debt instruments, CD, etc., etc.,

It may marginally affect GDP - collection of direct tax, income tax may come down, since traders will be booking losses and adjust earlier profit.

then why so much talk on STOCK MARKET CRASH.

Reason is the investors are richest/mighty - they control media and Government to some extent - all these are making fuss, hue and cry - as crying baby only get milk. they create sympathy from regulators, Fed. Bank, Government and obtain concessions, lowering the interest, free-bees, etc., etc.,

large media coverage on STOCK MARKET CRASH consfuses the public, small investors, who with fear of losing little money left-out with draw from the market - at that time big inveters enter the market and average the price and get fair valuation of their stock position. Media is benefited with hot new and big investors are benefitted with new emerging opportunity.

During Stock Market Crash small investors suffer and not country's economy or big (HNI) investors.

when there is force majure like flood, earth quake, etc., the sympathy will be only for one day.
Farmers lose very heavily - is there any compensation offered to them - not even a lip sympathy.
During industrial slow down lot of workers loses employment, is there any big news in the Media as stock market crash. Loss to Agricultural production, down sizing, loss of employment directly affect the economy - but there is no talk about it by mighty.
During STOCK MARKET CRASH even COMMUNISTS talks of reform, extending help to market, etc.,


Alyce 03.01.2009. 03:12

Why have candy bar prices gone up so much recently? Seems like in the last 6-8 months, candy bar prices have almost doubled. Several small stores near here now charger over $1 for a regular sized candy bar. Did sugar prices skyrocket? Is it all for transportation prices?


Admin 03.01.2009. 03:12

There are several reasons for the increase in candy, but it is mostly due to transportation.

Other reasons:
Increased demand for western style foods in emerging markets (China, India).

Increased milk prices, which are due to increased feed prices for cows.

Increased prices of other materials (candy wrappers, nuts, etc) which are mostly attributable to the rising fuel prices mentioned above.


Laurel 24.12.2012. 15:56

How to rid home of fleas? I have two dogs however they rarely leave our home. We have a big back yard for them to run around and play in but they rarely come into contact with other animals. However, now we have fleas. We recently heard some type of rat or mouse or chipmunk, etc, in our ceiling. I'm wondering if this is how fleas came into the house.
I need natural ways (I have a 6 month old daughter) to rid my house of fleas! We are all being bit and the fleas need to GO! There are normal sized ones and itty bitty ones. I'm also worried if the vermin comes back into the home through the ceiling then they'll keep coming back. Any suggestions!


Admin 24.12.2012. 15:56

Whether you use an insecticide that is natural or man made, the toxicity will be about the same, unless you spread borax or boric acid all over the place, they will be quite a bit more toxic than other products, though they are still considered to be low toxic...the products I use inside contains linalool, which is derived from citrus. Where ever a flea infested animal spends time there will be fleas, so if you had a stray cat or wild animal that spends time in one area, say just the other side of your fenced yard and your dogs go around the area they can pick up fleas..the fleas will try to stay on the dogs, but where ever the pets roam there will be flea droppings (dried blood) and eggs falling off of the animals. The eggs hatch and feed off of the dried blood and other organic matter on the floor to develop. Then they go into a pupa case and later emerge as adults, probably the small sized fleas you are seeing. To properly handle a flea problem, treat the pets, yard and inside the house as close together as possible. Any general insecticide will work on the yard, really don't have to hit the whole yard but do concentrate where they spend their time in specific locations. For the pets I have always suggested frontline or advantage, though there are probably newer products that work as well, but when those two first came on the market it was not uncommon to hear about flea issues 4 - 5 times a day, and after they were on the market for the next number of years , the number of calls I got went less than 12 flea jobs in a years time. Inside I use an aerosol flea treatment that contains an insect growth regulator (IGR). Vacuum, vacuum then vacuum some more for the next couple of weeks daily to help remove or stimulate the emerging fleas from the pupa stage, the sooner they emerge from the pupa cocoon the sooner the problem is gone. Impossible to say if you will need to retreat again or not, but more times than not I never get another call about the issue.


Jacquelyn 10.08.2011. 03:21

Where can i find vietnamese ao dai in philadelphia? I am looking for plus size ao dai for a special occasion.


Admin 10.08.2011. 03:21

South Philadelphia near the Italian Market has a large Vietnamese American population. Many Vietnamese businesses tucked in strip malls have emerged on Washington Avenue to service the local immigrant population. The Vietnamese sandwich banh mi is gaining much attention in Philadelphia and is now competing with the Philly Cheesesteak.

As of 2005, Vietnamese are projected to become the largest nationality in South Philadelphia. Philadelphia is in the top ten cities with Vietnamese populations and Vietnamese immigration destinations. Philadelphia even has a higher percentage and numerical population of Vietnamese than New York City, one of few Asian backgrounds that shy from New York.


Write a comment

* = required field





* Yes No