Market Research

Market Research

When to Use This Skill

• Validating a new business idea before investing time/money
• Preparing market analysis for a business plan or pitch deck
• Entering a new market segment or geography
• Evaluating whether demand exists for a product or service
• Understanding the competitive landscape before launching

Core Principle

MARKET RESEARCH ANSWERS ONE QUESTION: IS THERE A PROFITABLE GAP BETWEEN WHAT PEOPLE WANT AND WHAT'S CURRENTLY AVAILABLE?

Workflow

Step 1: Define the Research Scope

Ask the user:

1. What product, service, or business idea are you researching?
2. Who do you think your ideal customer is?
3. What specific question are you trying to answer? (Is there demand? How big is the market? Who are the competitors? What should I charge?)
4. What geography? (US, global, specific region)

Minimum needed: question 1.

Step 2: Market Sizing (TAM/SAM/SOM)

Calculate three layers:

• TAM (Total Addressable Market): Everyone who could theoretically buy this
• SAM (Serviceable Addressable Market): The segment you can realistically reach with your business model
• SOM (Serviceable Obtainable Market): What you can realistically capture in year 1-2

Sizing Methods:

1. Top-down: Start with industry data, narrow by segment and geography
2. Bottom-up: Start with unit economics (price × potential customers)
3. Comparable: Use a similar product's market as a proxy

Always use at least two methods and cross-reference.

Step 3: Audience Segmentation

Define 2-3 target segments:

Step 4: Competitive Landscape

Map competitors on two axes: price and specialization.

Identify the gap — the underserved intersection of audience and price point.

Step 5: Trend Analysis

Identify 3-5 relevant trends:

• Industry growth trajectory
• Consumer behavior shifts
• Technology enablers
• Regulatory changes
• Cultural or demographic trends

Step 6: Opportunity Assessment

Deliver a clear recommendation:

Examples

Example 1: Online Bookkeeping Service for E-commerce Sellers

Market Sizing:

• TAM: US small business bookkeeping market = $55B annually. 33.2M small businesses, ~60% outsource some bookkeeping function.
• SAM: E-commerce businesses specifically = ~2.5M active Shopify, Etsy, Amazon, and WooCommerce sellers in the US doing $50K-$2M annual revenue. At $300-500/month for bookkeeping services = $9-15B.
• SOM (Year 1): Targeting Shopify sellers in the $100K-$500K revenue range = ~400,000 sellers. At 0.1% capture rate = 400 clients × $400/mo = $1.92M ARR.

Audience Segments:

Competitive Landscape:

Gap identified: No dedicated bookkeeping service combines e-commerce platform expertise (like A2X) with human bookkeeping support (like Bench) at a mid-market price. This is the opportunity.

Opportunity Score: 4.2/5 — Large market, growing segment, fragmented competition, clear differentiation possible.

Example 2: Meal Prep Delivery for Remote Workers

Quick Assessment:

• TAM: US meal delivery market = $26.4B (2024), growing 12.5% CAGR
• SAM: Meal prep specifically (not restaurant delivery) for professionals = ~$4.8B
• SOM (Year 1): Single metro area, 500 subscribers × $150/week × 50 weeks = $3.75M

Key Trends Supporting:

1. Remote work is permanent for 30%+ of knowledge workers
2. Health-conscious eating up 23% post-pandemic
3. "Functional food" trend — meals optimized for energy/focus
4. Subscription fatigue is real — but food subscriptions have highest retention rates

Competition Intensity: HIGH — Factor, Trifecta, Snap Kitchen, plus 50+ local operators in most metros. Differentiation must be razor-sharp.

Recommendation: Viable only with a hyper-specific niche (e.g., "brain-performance meals for remote tech workers" or "macro-counted meals for CrossFit athletes"). General meal prep is a red ocean.

Recovery & Fallbacks

• No industry data available: Use bottom-up sizing from comparable businesses, social proof (subreddit sizes, Facebook group membership, search volume), and proxy markets.
• User's idea is too niche to size: That's often a good sign. Size the adjacent market and estimate the niche as a percentage.
• Market looks saturated: Saturated markets still have gaps. Look for underserved segments, pricing tiers, or geographic pockets. If truly no gap exists, say so honestly.
• User wants exact numbers: All market sizing is estimation. Present ranges, not false precision. Label sources and assumptions clearly.

Constraints

• ALWAYS state data sources and assumptions — never present estimates as facts
• NEVER guarantee market outcomes — research reduces risk, it doesn't eliminate it
• Present TAM/SAM/SOM as ranges when exact data isn't available
• Distinguish between addressable market and actual demand
• Include at least one contrarian data point or risk factor — don't just confirm what the user wants to hear