Determining Market Size
When trying to figure out market size the first place I check is the magazine directories such as Bacon’s Magazine Directory, Burrelle’s Media Directory, Oxbridge Communications Directory of Periodicals, and SRDS Magazine Media Source to name a few. You can find out in a few minutes just how many different magazines serve this market. The number of magazines is a good indication of size. Remember, the advertising revenue supports the magazines and the industry buyers support the advertisers.
Note how expensive the ad space is in the magazines. A good way to see the comparative figures for magazines is to look in Oxbridge Communications Magazine Directory - they give you a CPM or Cost Per Thousand for each magazine. This shows you the cost to reach a thousand people with a full page black and white ad in that magazine. It makes comparing magazine advertising costs much easier. Hummm… Thanks, Oxbridge!
Next check the circulation of each magazine: how large is their circulation? This is probably the single best method of assessing market size. There will be some pretty consistent figures showing how many copies are distributed to industry personnel. If you really want to see just where all those magazines are being sent, call the publisher and ask for a “Media kit.” This free package is how the publishers themselves market their own magazines to advertisers. In the package will be a copy of an independent audit showing who qualifies to receive the magazine, how they are qualified, and shows the circulation breakdown of exactly where all the copies are sent.
There are usually some magazines that have 30% or 50% more circulation than most of the others. These periodicals may have more relaxed qualifications to receive their magazine. Their readership may be of lesser value because of this, but maybe not - depending on what you are selling, and how tightly focused your audience profile needs to be targeted. If you want to address an entire marketplace by sheer numbers, these larger circulation magazines may be the way to go.
While the larger distribution magazines may be more freely circulated, the smaller circulation magazines may be sent to a more tightly qualified subscriber list; or the magazines may be sent only to “Paid” subscribers - which really knocks down circulation. Paid circulation, however, may mean better readership, a higher quality, or a more focused publication.
Some paid magazines are sent strictly to association members, so be on the lookout for that, too. The magazine is paid for out of the members’ dues. These publications may be good, or horrible, even though their subscriber list is large and it’s shown as a paid-for magazine. The horrible magazines simply get thrown out by the subscriber. I throw out the AAA magazine that comes with AAA membership, but I’m sure their circulation figures include me as a reader. I suspect nobody reads it, as it’s one of the worst magazines I’ve ever seen: filled with blatantly biased articles designed solely to sell their own products and the products hawked by paying advertisers in their magazine. Ugh. And I thought there was always supposed to be a dividing line between editorial and advertising.
Other ways to assess market size
While at the library looking over the magazine directories, head over to the reference desk and drag out the SRDS Directory of Mailing Lists (SRDS List Source) along with the Oxbridge Communications Directory of Mailing Lists. Look up the industry you are researching and find out how many lists serve it. Then note the size of each list in that market. This will give you a few more numbers to think about. While there, see if you can find out if the numbers are increasing or decreasing for that marketplace. That will give you an idea if the market is growing or declining.
Next, get the catalogs of some of the major list vendors. These vendors can be found in the direct marketing trade journals: you can get a free copy of each of these trade journals by calling the publishers and asking for a media kit, or a sample copy for advertising evaluation, the magazines will go right out via first class mail. The publishers’ phone numbers of said direct marketing magazines can be found in… the magazine directories, thanks for asking. Call all the list vendors who have ads and ask if they have a catalog. I’ve already done this and have written up each catalog, size, page count, organization, information they provide and so forth. You can call me (610-642-1000) for a copy of my article “Free Catalogs of Mailing Lists.” We’ll talk about its cost when you call.
When you get the list catalogs, look up the industry you’re researching. Here, you’ll be able to see the statistics of how many businesses there are in this particular industry in the U.S. You’ll also be able to find out business size by income or number of employees. In some instances you’ll be able to get the names of individuals and their positions. If you’re really savvy, you can get this information on the web, and then click-in some overlays to find out size (and wealth) related questions, like how many businesses are in each income range, how many have over 100 employees - or over 50 employees, or under 10 employees - or whatever marketing segment you’re looking for. You can get breakouts by demographics, by geographies, zip codes, living clusters, or any which of 50 different ways - and you’ll be able to find out this information in real time, er… sort of. Look up lists on the Internet. If you need immediate counts, this can be the fastest place to get them or at least the first round of them anyhow. There’s nothing like calling the list vendor for real information and more articulated breakouts.
If you’re researching consumer markets, or even industrial markets that are fairly large, you might check the catalog directories of Oxbridge Communications or Woodbine House. These will give you an idea of what is sent to that segment of the population. So if you're marketing a particular type of blue jeans, you’ll know right away there are hundreds of apparel catalogs, and your market is indeed huge.
Finally, look in the reference books of associations - such as the Gale Encyclopedia of Associations, the Columbia House Book of Associations, and the Leadership Directory of Associations. The size of the association will give you an immediate industry assessment. But then, call the association for that industry - the folks at the association headquarters will be very knowledgeable about the market, its size, its strengths and weaknesses, the magazines and all the major players. You can probably also get a list of the major players - often the association directors - and call them for still further information. These heavyweights are usually exceptionally helpful - that’s why they are directors of the associations in the first place.
To me, establishing market size isn’t the amount of money spent in an industry. For example, to say the motorcycle industry is a 4 billion dollar industry doesn’t tell me very much. This figure is meaningless to small businesses -- and it’s especially harmful to say “This market does 4 billion a year, if we can just get a 1% share….” As far as I know, no marketing plan correctly takes the industry figure and figures a percentage of what they will receive in revenue. Of course I’ve only been in marketing for about 25 years. When I look at a market I need to know how easy or difficult it will be to introduce a product or service to that industry. So I need to see how entrenched my client’s competition is, what the entrance barriers are, and…
Here’s some of the other stuff I look at: is the industry product intensive? Are there tons of magazines? And do all the magazines continually show huge groups of new products? I know it will make my client’s products harder to get noticed and thus harder to bring to market. Lots of magazines, lots of ads, make an industry very product intensive, and with our product we’d be just one of the pack. While it might make it very easy to get our first press release featured, subsequent releases will be difficult to place.
Are there huge competitors in direct competition with our own products? If there are, they may have all the major distributors tied up distributing their products, so they won’t be able to distribute ours. Additionally, we may need to address their strengths in our marketing plan and stay away from those areas -- or figure out their weaknesses and attack them. We may also need to adjust our price or our warranties to align with theirs.
If it looks like we can attack the industry with a reasonable budget, if we can find and reach the major players and alert them of our products and services, if we can test the media with press releases before committing to an ad schedule, if there aren’t hundreds of people marketing the same product - or something close enough that our product can’t be realistically differentiated from the pack, if the competition isn’t big enough to cut their price in half so that we must meet their discounted pricing (allowing us no profit) hey - I say we take a shot.
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Jeffrey Dobkin is a fun speaker who can get serious and technical if requested. He is an expert in marketing and direct marketing, and his specialities are effective writing to specific objectives, and consulting. He also writes catalog copy, direct mail, and hard selling letters. Call him for infomation and free samples of his work: 610-642-1000 rings on his desk.