Working with market models is effective – How you can make predictions and determine market size using model analyses

May 2016

When it comes to calculating market volumes and make predictions about markets in order to determine your own company's position, the problem of unavailable data often arises. This can be due to the fact that there are no adequate databases or that your competitors are unwilling to forward their figures. After all, you are equally unwilling to disclose your data to them. So what can be done? One possibility is to have a market analysis conducted by an in-house team. But this has the disadvantage of not having the employees in question available for other tasks during the duration of the analysis. Apart from that the training of a specialized market analysis team within your organization would be a time-consuming matter.
It is therefore far more efficient to outsource the analysis to a professional market research company like Market Researchers. In order to deal with the relevant issues it is highly recommendable to work with market models. But this requires a high level of competence and experience, which the Market Researchers team has. On the basis of the models developed it is then possible to determine market volumes as well as make reliable predictions about trends and developments. These can be determined or forecast regarding the relevant market segments in each case, for example, or geographic units like countries or regions.
How does such a market model work? All models work according to the principle of extrapolation, i. e. at first detailed market data is gathered in line with the methods of market research for certain individual markets or segments and countries or regions respectively. It lies in the nature of things that in your selection you will concentrate on those markets which are either strategically important or for which the most data exists. The last case occurs, for example, if industry analyses have already been conducted or if you are dealing with an area for which there is simply ample data available consisting of demographic or company statistics or of macro- and microeconomic data, for example. After having determined certain parameters which have turned out to be reliable indicators for market size, data for further markets, segments or geographic units is then extrapolated, i. e. comparative data is calculated on the basis of analogy. This is why this method is called top-down.
For the bottom-up method, on the other hand, data is gathered by aggregation of the data already collected, i. e. the data of individual market segments or regions serves as the basis for determining the data for the whole market or country. This can be done in two different ways. You can either ascertain all of the national data using the top-down method and afterwards adding all national figures to receive regional ones or you employ the statistical means of projection. Assumed percentages of one or several markets of a region, for example, for which there already exists a market volume, serve as the input for the projection. The algorithms for determining the data in each case are the basis for the market model which can be used in turn to calculate further market figures. Market Researchers is able to advise and support you comprehensively in all aspects of market analysis and market models.