What are the most effective market research methods for evaluating a new biotech product's market size?

1 Top-down approach

One common method for estimating the market size of a new biotech product is the top-down approach, which involves starting with a broad market segment and then applying various filters and assumptions to narrow down the target market. For example, if you are developing a new drug for a specific disease, you might start with the total population of the country or region, then multiply it by the prevalence rate of the disease, then by the percentage of patients who are eligible and willing to use your drug, and then by the price of your drug. This method can provide a quick and simple estimate, but it also has some limitations, such as relying on secondary data sources, making optimistic assumptions, and ignoring the competitive landscape.

2 Bottom-up approach

Another method for estimating the market size of a new biotech product is the bottom-up approach, which involves starting with a small unit of analysis and then scaling it up to the larger market. For example, if you are developing a new diagnostic device, you might start with the number of potential customers in a specific location, such as hospitals or clinics, then multiply it by the number of tests they perform per year, then by the adoption rate of your device, and then by the revenue per test. This method can provide a more realistic and granular estimate, but it also requires more primary data collection, such as surveys, interviews, or experiments, which can be time-consuming and costly.

5 Customer segmentation

A fifth method for estimating the market size of a new biotech product is the customer segmentation, which involves dividing your potential customers into different groups based on their characteristics, needs, preferences, and behaviors, and then estimating the size and value of each segment. For example, if you are developing a new wearable device for monitoring health conditions, you might segment your customers based on their age, gender, income, lifestyle, health status, and motivation, and then estimate the number of customers, the willingness to pay, and the loyalty of each segment. This method can help you tailor your product and marketing strategy to each segment, as well as identify the most attractive and profitable segments, but it also requires a lot of customer research, such as surveys, interviews, or observations.

6 Here’s what else to consider

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