Determining Market Size

Marketing: An Unusual Way of Determining Market Size

A Technical Marketing Article by Jeffrey Dobkin

When trying to figure out the size of a market for a client, the first places I check are 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 a specific market. The number of magazines is a good indication of market size. Remember, the magazine advertising revenue supports the magazines, and the buyers in the industry support the advertisers by buying advertised products.

In the magazine directories – found in the reference section of all larger libraries, note how expensive the ad space is in the magazines. A good way to see the comparative advertising cost figures for each magazine is in Oxbridge Communications Magazine Directory.  This reference gives you a “CPM” or “Cost Per Thousand” for each magazine. The CPM is the cost to reach a thousand people with a full page black and white ad in that magazine. It makes comparing magazine advertising costs across multiple magazine insertions much easier and simpler.

Next check how large the circulation is of each magazine. This is probably the single best method of assessing market size. There will be some pretty consistent figures by the magazine audit bureaus 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. The package will contain a copy of an independent audit showing who qualifies to receive the magazine, how they are qualified, and shows the various circulation breakdowns of exactly where all the copies are mailed. These audits bureaus usually go to the post office and verify that the magazine sends out as many copies as stated on their reports. Just keeping honest people honest, I suspect.

Most industries usually have a few magazines that have 30% or 50% more circulation than most of the others. These periodicals may have a more “relaxed” set of qualifications to receive their magazine. Their readership may be of lesser value because of this, but maybe not – depending on what you’re selling, and how tightly focused your audience profile of buyers needs to be targeted. If you want to address an entire marketplace by sheer numbers, the lesser qualified 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 highly-qualified subscriber list.  Some publishers only send their magazines to “Paid” subscribers – which really knocks down circulation. Paid circulation usually means better readership, a higher quality of editorial, and/or a much more focused publication.

Some paid magazines are sent strictly to association members, where the magazine is paid for from the members’ dues. Not all are good – some of these publications may be a good base of qualified readers, or quite horrible even though their subscriber list is large and the publication is shown as a paid-for magazine. For example, I throw out the AAA magazine that comes with AAA membership, but I’m sure their circulation figures include me as a paid subscriber and their advertising brochure describes me as an avid reader. Frankly, 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 supposed to be a dividing line between editorial and advertising.  While it’s still an indication of market size, actual readership is another consideration for placing an ad.  There is huge difference between circulation and actual readership.

Other ways to assess market size

While you’re 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 mailing lists serve it. Then note the size of each mailing list offered in that market. This will give you a few more “marketing universe” numbers to assess market size. While you’re there at the library see if you can find out if the numbers are increasing or decreasing for that marketplace by comparing an older list directory to a newer one. This will give you an idea if the market is growing or declining.

Next, get the catalogs of several of the major mailing list vendors. These vendors can be found in the direct marketing trade journals.  You can now usually get a copy of the trade journals online, or definitely by calling the direct marketing trade journal publishers and asking for a media kit.

The magazine publishers’ phone numbers of direct marketing magazines can be found in… the magazine directories of course, so get those numbers when you’re in the library, in the reference directories. Once you find the magazines, call each and ask for a media kit: it goes right out to you. Be sure to ask for a sample copy.  Then call the list vendors who have ads or write-ups in the magazines 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 the cost when you call.

When you get the catalogs of the mailing list companies, 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 businesses by size, by income or by number of employees. In some instances you’ll be able to get the names of the top individuals and their positions in the company.

If you’re really savvy, you can get this information on the Internet, and then place some overlays to find size, wealth, and 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 the market segment you’re looking for. You can get breakouts by demographics, by geography, 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.  It will take you a while, and if you hit a road block, the main library in your area, or a university library for sure will have many private data bases you can tap into to look up lists on the Internet. If you need immediate counts of how many people on each market segment, this can be the fastest place to get them or at least the first round of them. Or if you’re like me – a way to get counts at 3AM, anyhow. However, there’s nothing like calling a list vendor for real information, and more articulated breakouts.

If you’re researching consumer markets, or even industrial markets that are fairly large, check the directory of mail order catalogs (The Directory of Mail Order Catalogs, Grey House Publishing, 800-562-2139). This awesome reference tool 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, their press runs and mailing list data. And you’ll readily find your market is indeed huge.

Finally, look in the reference directories 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 small business marketing plan correctly takes the industry total amount and figures a percentage of that as what they will receive in revenue. Of course I’ve only been in marketing for about 25 years.  But still, I’m VERY sure this is NOT a way to figure out how much a firm will receive when selling into that market.

When assessing market size it’s usually for a product or service a client is introducing.  So when I look at a market or industry I need to know how easy or difficult it will be to introduce a product or service to that industry. I need to see how entrenched my client’s competition is, what the marketing entrance barriers are, and a host of other qualifiers…

Here are some of the other marketing considerations I assess: is the industry product intensive? Are there tons of magazines? And do all the magazines continually show huge numbers of new products? I know this will make my client’s products harder to get noticed and thus harder to bring to market. Lots of magazines and lots of ads means an industry is product intensive, and with your own product you’d be just one of the pack. While it might make it very easy to get your first press release featured, subsequent releases will be difficult to place. And advertising in lots of trade journals can get pretty expensive, pretty fast.

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 we won’t be able to find a distribute for ours. Additionally, we may need to address our competitors 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 – or make them much better as a sales point of contention.

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 existing competition doesn’t look likely to cut their price in half so that we must meet their discounted pricing during our marketing introduction, then hey – I say we take a shot.

If you liked this kind of geeky technical marketing article, you may also like: The Objective of A Marketing Plan

Or, if you like marketing thiiiiiiis much, you’ll probably like this here brief article: 63 Marketing Audit Questions.

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Bio –
Jeffrey Dobkin is the author of How To Market A Product For Under $500!, Uncommon Marketing Techniques, Direct Marketing Strategies, and Successful Low Cost Direct Marketing Methods. He’s also a direct response copywriter specializing in highly responsive sales letters, print ads for magazines and newspapers, web and catalog copy; and direct mail packages. He also analyzes direct marketing packages, ads, catalogs, and campaigns: turns out he’s cheaper than running an ad – or campaign – that fails. Mr. Dobkin is a speaker and a direct marketing consultant. Call him at 610-642-1000 with questions or for samples of his work.  Sign up for our email mailing list.  Thanks for visiting our site – we know you are busy, and there are many websites to explore.  Thank you.