Forecasting The Size Of The Pie – Considering Addressable Market

Recent data from the US Census Bureau indicates that the poverty level in the US has grown to 14%.  Just consider: Is a family of four, earning less than $22,000 per year, ever going to be an online household? Can they afford a computer and the cost of Internet access?

 In fact, a household with a very low income could obtain a computer, possibly helped by a subsidy or donor program, and they may start using the Internet to purchase goods or services that can save money. The chance may be low, but there’s something to be learned from considering this possibility while assessing your market opportunity, particularly if you sell goods online.

 Firms in various sectors have benefited from looking outside their traditional target group (as defined by income). Although not addressing low-income families, Tiffany & Co. is a good example of a business where it was valuable to consider a lower-income segment even when conventional wisdom suggested leaving that out of its addressable market definition.

 Another kind of definition to be careful about is technology ownership requirements. Mobile banking is commonly looked at as an enhancement to online banking. But, Forrester’s Technographics data indicates that people who have no online access can and do take advantage of mobile banking. In fact, this offline group is more likely to engage in mobile banking than their counterparts who do have online access but do not bank online. On the other hand, if you don’t have a mobile phone, you can’t be a mobile banker.

 Please share your experiences with us; you may even uncover a new business opportunity!