ESYB2 043 - Example of Writing the Target Market and Market Size
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[00:00:00] Now I want to walk you through how I identify the target market, the demographics and psychographics, and also how I calculate the overall opportunity size. So let me just read to you that section. So, I did extensive research with these apps until they reached 300, 000 downloads. I answered the questions on the apps myself, and that's not by a coincidence or chance.

I actually built that in, that was part of the design of the apps, so that I could talk to the consumers of the apps. You see how I've been talking about the Eric Ries Lean Startup Methodology, which says you should talk to your consumers and get feedback. You see how I always talk about, you should get to know your target audience.

So I literally built in that functionality so that I can have an abundant amount of feedback. Before the product was live, that was my idea. It was part of my planning, and it worked. Because, inadvertently, people who were asking me for this advice, they were [00:01:00] kind of telling me what they needed, so at the same time I was updating the app and building that for them.

Not everybody asked questions, but a lot of people did. And at first, It was only a business planning app. And then I realized, okay, they're asking about business ideas, business planning, marketing, and fundraising. So really. It evolved into these four people also asked about legal and accounting topics, but I didn't want to get into it because I didn't have enough expertise in those fields.

And also, I mean, you have to be a lawyer to give advice. So I stayed generally with business ideas, planning, marketing, and fundraising. And by the way, if you look at topics that I cover a year, many years later, Those are mainly my niches that I focus on. So I built out my expertise from that and grew my authority in personal brand in that space.

So let's look at the demographics of the users. App users are usually younger, so they're under 35 years old. Here's the breakdown of The percentages all users where they're from. That's something that I was able to get from the app store analytics. Then, you know, the [00:02:00] relatively low income because they're planning the business on apps instead of a computer.

And also entrepreneurs aren't typically rich. And usually because they're young and they have time to start a business at low income, usually not married and no family, meaning kids. Regarding psychographics, this is where it gets interesting. This is where I got to. No, them after talking to them, they don't need to necessarily start a new business.

They just struggling to make money. That's what I found a lot of the time. And a lot of the businesses were low tech. When I first started to make these, I thought, Oh, they're going to like start new, cool startups. I thought it was going to be the kind of like the Silicon Valley startups, like the new Uber.

But usually it was local cleaning business, local restaurant, local home repair. Just people needed to make a little money. A lot of people faced financial stress and pressure. And by the way, years later, when I create courses and things like that, it's no different. Majority of entrepreneurs, they have the relatively low tech businesses, usually services.[00:03:00] 

A lot of people who start out, they have a relatively low confidence. They often don't get too much support. And sometimes in many countries, they don't have mobile banking. So they actually couldn't even pay through PayPal. And often because of the stress that they have, they need solutions fast, limited funds, and they prefer free options for creating the plan.

So those are all the psychographics. Those are things that I learned through my work with them now, because identifying the target market is so closely related to calculating the opportunity size. Let's talk about that. What I used here is I used the bottom up and the value method that we covered earlier.

I made a hypothesis that the full potential of the apps is reached when they dominate app store search on iOS and Android. Because for these kinds of apps, that's the biggest marketing channel. And just from dominating the search, these apps can reach a million people per year [00:04:00] just from search. And then the assumption was that because of that great branding and everything else, there will be another 100 to 300, 000 downloads a year, which at the high end will result in a million and 300, 000 downloads per year.

So it doesn't have the opportunity like an Instagram, where it's not something that can have a billion downloads. It's not that, it's niche. And app users are known for being poorly monetized. You know, people get an app, they don't like it, they throw it away, they delete it. So you need a lot of downloads to make real money.

So my assumption was that if I keep working on the monetization, I can reach monetization of 25 cents per download. It might look low, but actually for apps, this is quite high. Even this is not even easy, but you see how basically I valued each user. And I saw what the potential of the serviceable market is, the size.

And so that enabled me to calculate that this is a opportunity [00:05:00] worth 325, 000 per year. And you see, that's how I came up with the addressable market size for my product.

