SMP Part (1) Market Audit & Market sizing.

Marketing Audit identifies internal strengths and weaknesses, highlights underutilized resources, channels, or services, as well as analyzing external and competitor factors, to develop a more accurate strategic plan.

A marketing audit is a “systematic appraisal of all the external and internal factors that have affected the company’s commercial performance over a defined period” (McDonald & Wilson, 2016, p.59).

There are 3 levels of analysis to structure a marketing audit: internal, external and competitor analysis, these 3 steps or levels of Auditing together with SOWT analysis will make marketing management able to set targets and objectives and take strategic decisions.

Market sizing is defined as “estimating the number of buyers of a particular product, or users of a service.” (Market Sizing Overview, 2020) Without implementing segmentation many businesses can easily fall into a trap of overestimating their potential market size.

Market Share is the Revenue / Total Market Revenue x 100%.

There are 2 approaches to do market sizing

·????????Top Down

·????????Bottom Up

Top down analysis, you need to define the size of the total market which your organization operate, then estimate what your share of the market is, the problem with this approach is you need to make a number of assumptions on how much market penetration you will have and also how many purchases are made by each customer each year inside that market.

Although this approach may sound reasonable but its not the most respected way of estimate the potential market. As it doesn’t incorporate any real insight in to the market and the forces within the market or even the difference between customer grouping within a given market.

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In contrast, a bottom up analysis is don’t but thinking about current sales of similar products and estimate how much of those sales you can capture. This is a much more accurate approach because it looks at patterns that existing sales today rather than the total market. ?

So when analyzing any market, you want to group customers in 4 different groups:

1. Already buy exclusively from you.
2. Buy from competition and you.
3. Buy exclusively from competition.
4. Don’t buy product from anyone. We call them ‘’ non category users’’ and they are very important because instead of getting customers from your competitors getting these users will help you to increase the total market size and your market share which is new source of sales to you.?

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