Market Sizing Estimation Framework
Market ResearchadvancedClaude 3.5 Sonnet or GPT-4o. Claude excels at structured financial analysis and showing detailed reasoning, while GPT-4o provides faster processing for large datasets. Both handle multi-step calculations and assumption documentation well.
When to Use This Prompt
Use this prompt when developing business strategy, pitching to investors, or making resource allocation decisions. It's essential for early-stage companies validating market opportunity, growth-stage companies expanding into new segments, or established companies evaluating new product lines.
The Prompt
You are a market research analyst specializing in TAM (Total Addressable Market), SAM (Serviceable Addressable Market), and SOM (Serviceable Obtainable Market) estimation. Your task is to provide a comprehensive market sizing analysis for the following business opportunity.
## Business Context
- Product/Service: [DESCRIBE YOUR PRODUCT OR SERVICE]
- Target Industry/Vertical: [PRIMARY INDUSTRY OR VERTICAL]
- Geographic Focus: [GEOGRAPHIC REGION OR GLOBAL]
- Company Stage: [STARTUP/GROWTH/MATURE]
- Competitive Position: [DESCRIBE YOUR COMPETITIVE ADVANTAGE OR POSITIONING]
## Analysis Requirements
### 1. TAM Estimation (Total Addressable Market)
Calculate the total market opportunity if your product achieved 100% market penetration. Use multiple approaches:
- **Top-down approach**: Start with global/regional market data and narrow down to your addressable segment
- **Bottom-up approach**: Calculate based on target customer count × average revenue per customer
- **Value-based approach**: Estimate based on customer pain point value and willingness to pay
### 2. SAM Estimation (Serviceable Addressable Market)
Define the realistic market segment you can serve given your:
- Geographic limitations
- Product capabilities
- Customer segment focus
- Competitive constraints
### 3. SOM Estimation (Serviceable Obtainable Market)
Project realistic market capture within [TIMEFRAME: 3/5/10 years] based on:
- Current market share of competitors
- Your go-to-market strategy
- Sales capacity and growth rate
- Market adoption curves
## Data Sources & Assumptions
For each estimate, cite:
- Primary data sources (industry reports, government data, surveys)
- Key assumptions and their rationale
- Confidence level (high/medium/low) for each estimate
- Sensitivity analysis (what if market grows 2x faster or slower?)
## Output Format
Provide a structured analysis with:
1. Executive summary (2-3 sentences)
2. TAM breakdown by segment with calculations shown
3. SAM definition and justification
4. SOM projection with growth assumptions
5. Key risks and opportunities affecting market size
6. Recommended next steps for validation
Be specific with numbers, percentages, and growth rates. Show your work and reasoning for all calculations.
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Tips for Best Results
- 1.Provide specific numbers for your market segment (company size, industry, geography) rather than broad categories. AI produces more accurate estimates with concrete parameters.
- 2.Request sensitivity analysis by asking 'what if TAM grows 50% slower?' This reveals which assumptions most impact your market size and where to focus validation efforts.
- 3.Cross-reference AI estimates against 2-3 published industry reports (Gartner, IDC, Forrester) and cite them in your prompt for grounding in real data.
- 4.Break TAM into customer segments (enterprise, mid-market, SMB) separately. This reveals which segments drive value and helps prioritize go-to-market strategy accordingly.
Example Output
## Market Sizing Analysis: B2B SaaS Project Management Platform for Professional Services
### Executive Summary
The total addressable market for project management software in professional services is estimated at $18.2B globally, with a serviceable addressable market of $4.1B in North America and Europe. We project capturing 2.3% of SAM by year 5, representing a $94M SOM opportunity.
### TAM Estimation: $18.2B
**Top-Down Approach:**
- Global software market: $756B (Statista 2024)
- Project management software segment: 2.4% = $18.1B
- Professional services firms globally: 2.8M companies
**Bottom-Up Approach:**
- Target companies (100+ employees in professional services): 45,000 globally
- Average annual spend per company: $405,000
- TAM = 45,000 × $405,000 = $18.2B
**Confidence Level:** High (validated against 3 industry reports)
### SAM Estimation: $4.1B
Focusing on North America and Western Europe (60% of TAM) where we have:
- Language/compliance expertise
- Sales infrastructure
- Partner ecosystem
SAM = $18.2B × 22.5% = $4.1B
### SOM Projection (Year 5): $94M
Assuming:
- 3% annual market growth
- 2.3% market share capture (conservative vs. competitors at 4-6%)
- Average contract value: $42,000
- Customer acquisition: 2,238 customers by year 5
Year 5 SOM = 2,238 customers × $42,000 = $94M ARR
### Key Risks
- Market consolidation reducing TAM by 15-20%
- Slower adoption in mid-market segment
- Competitive pricing pressure
### Validation Next Steps
1. Conduct 20 customer discovery interviews
2. Survey 200 project managers on budget allocation
3. Analyze competitor pricing and customer acquisition costs
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