Market analysis is one of the most critical things any organization can do; small businesses and startups especially. Market analysis essentially involves the product of two critical numbers. First, the total size of the market. Second, the portion of that market that is practically attainable. This second number is the more critical of the two, but people frequently lose site of it.
The best example I’ve come across in recent weeks is a bar in Pittsburgh. If you started a bar in Pittsburgh how/where/what would you start? If you’re like most people you would walk to the strip district or station square or the southside and get drunk off the number of customers lined up around the corner on a Saturday night (pun intended). You’d figure that you should set up a bar that caters to the Friday and Saturday night crowd in the Southside or the Strip and you’d probably at least get some of that business. You might succeed that way, you probably wouldn’t. The problem with your logic was the “probably at least get some of that business” bit.
“Probably” is a dangerous word in any market analysis. What you should think seriously about is where you can find a 100% figure for the second number, then see how large you can make the first number. This usually means identifying a new market and claiming it. There are countless examples of this, but today’s season-specific one is Piper’s Pub. The pub was able to build a line around the corner, just like the bars in the strip and station square. In fact the place has been packed almost every day for the last two weeks. The difference? Happy hour starts at 7am instead of 7pm and the football is played with feet. Piper’s has cornered the market on world cup soccer (and when that’s not in season, rugby and cricket too). Sure, they run a decent business on Friday and Saturday night, but they make a killing in the mornings and early afternoons. All because they found a more then large enough market that they could get nearly all of.