Analyzing Size and Composition of Market

In setting prices for your product or service, one of the first calculations you must do is to estimate approximately how large your potential sales volume could be, based on a reasonable assessment of your potential market share in the product category, at different price levels. Knowing the size of the existing market is critical to determining if there are enough customers to establish and grow a business.

In an established market, in order to sell your product you must cut into your competitors' market shares. Who will you compete against? What are their strengths and weaknesses? Are any direct competitors vulnerable to your products? Are any competitive products priced too high or not providing product "value" for the price? Secondary market research can help you answer all these questions.