by
Ashraf Alsinglawi , Medical Supply Chain Planner , International Committee of the Red Cross
When performing a market analysis, it is important to use both a top-down approach and a bottom-up approach. In the top-down market analysis you will typically start with an STP analysis (Segment, Target, Position). Using these insights, in a top-down market forecast you try to estimate the overall size of your market segment, looking at what might be feasible in terms of market share and customer adoption and doing the math.
One major problem, however, with this top-down approach is that it doesn't tell you anything about your first 'real' customer and it fails to provide more qualitative insights on how customer really think. Therefore, you also need a bottom-up market analysis, where you start to identify a first potential customer and based on the initial feedback, you adapt your products or services in order to develop your initial customer base. Bottom-up market forecasts look at things in a more micro fashion so it's much more convincing to investors.
