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Here are resources to help you research your market.

Researching a market (high-level)

Some questions to answer which will help you understand the main dimensions of your market.

The examples below imagine creating something to help connect dog walkers with dog owners, to make sure pet pooches with busy owners get their exercise.

Make sure to repeat the process for each audience, and consider them as a market of their own. Dog walkers are an additional audience, and therefore an additional market. It may have more, if for example we include dog walking for businesses such as veterinarian or dog day care.

Note: The table below represents the entire market of dog owners in the UK. The needs of these people, their circumstances and how they experience the problem will differ greatly. In the User Research chapter, we'll break down audiences into much smaller groups, to find who we should test our early prototypes with, and who will likely be our first customers.

At the end of this table you'll see a placeholder for citations. Keep track of where you're finding evidence to fill out this table and make a record of your citations for future reference.

Audience: Dog Owners
Connected Via: Family, friends, Facebook groups, online forum

List of Citations:
Citation 1
Citation 2
Citation 3

Types of revenue models

There are many types of revenue models. These are some of the most commonly-used.

The most successful revenue models align with the interests of their customers. Therefore ensure you're choosing which models to test based on what makes sense for your business, and your customers.

Transactional
Selling your product in a one-off event to customers. This could be selling software to businesses, or in-app purchases, like purchasing specialist items in video games.

Advertising
Selling opportunities to advertise on your product. Facebook is an obvious example of this. As a user, you’re not paying cash to use the product and service, instead advertisers pay to show you ads.

Affiliate
Earning commission from generating leads for other businesses. If you’ve ever been recommended a product on a website, followed the link and then made a purchase, there’s a good chance the website owner took a cut of the sale.

Broker
Earning commission for arranging and closing a deal between the buyer and seller. Estate agents, insurance brokers, stock brokers, lawyers are all clear examples.

Tipping
Being paid a discretionary amount for your product or service. Tour guides will often provide free tours with the option of tipping at the end, and more recently platforms like Twitch have enabled streamers to receive tips from their followers.

Subscription
Regular periodic sales (often with no end date) to allow access to your product or service. Removing the need to buy as a lump sum upfront, many products and services now rely on subscription models. Think Netflix, Dollar Shave Club.

Direct
Sales made between sales staff and customers. These take the form of inbound (e.g. a call received after someone sees an ad) or outbound (where sales staff call customers, which you’ve no doubt experienced).

Channel
Selling your product or service through a partner (via their channel). Coca-Cola is the most famous example here, selling its cans of coke to you via supermarkets, vending machines, food & drink establishments, and not from their website or proprietary physical stores.

Retail
Selling your products through third-party stores, physical or digital. The Apple App Store (digital products) and Amazon (physical products are examples of digital retail, whereas any physical store selling partner products, like supermarkets, are physical retail.

Freemium
Providing value upfront for free to acquire users and attempt to up-sell profitable products or services. Software often uses this model to provide a basic product for free, with the option to upgrade for paid-for premium services. A physical example would be an apparel store offering free stye consultation to encourage purchases.

Marketplace
Offering the platform through which users can pay to exchange goods and services. eBay allow users to buy goods from sellers, charging the seller for listing the item, while Airbnb adds a service charge to the cost of a stay.

Comparing alternatives

Often termed 'Competitor Analysis', use this table to compare alternative ways your audience can solve their problems, whether they're workarounds, or competitors' products.

Try speaking to your audience, searching for the problem and see if competitor products come up, and read articles on the problem.

The examples below are comparing alternative ways of finding childcare currently.

The Gap

What you should be hearing from your audience in this example is the problem they're facing, in finding trusted and qualified people when their usual alternatives are available (family and friends). This is what parents can't do currently; the gap in the market.

Calculate the value of a market

Try using these very simple steps to estimate the value of your market.

Make sure to repeat this process for each market, if you have more than one.

Using the information we discovered in the researching a market task, calculate the market's value (M) by multiplying the solution value (S) by the frequency the solution is required (F), then by the total number of people who require the solution (N).

M = S × F × N

In the dog walking example, 20% of the audience paid someone to walk their dog once a week. This is our current best guess as to how often our solution would be needed, until we get better data. So 20% of 6m people = 1.2m people, which is our value for N. Once a week, which is 52 times annually, and our frequency F. The solution value is £2, so £2 is S. Let's try this example:

M = £2 (S) × 52 (F) × 1,200,000 (N)

This calculation means our market size (M) is approximately £125m annually. A very healthy figure. But to achieve anything like this number, we'd have to reach most of the 1.2m people who could be potential customers, hope they needed our product once a week, and were happy to pay the £2 fee each time. Not only that, but our product will require operations, people to provide customer service. We'll need to spend money on marketing to attract customers, and that's aside from the team who would build the products, like a website, apps and so on.

Big numbers are good, but reaching anywhere near them is a long and difficult path. However, a product with product/market fit has a much higher chance of achieving these astronomical goals, which is why I wrote this book; to help you get there.