Some useful market research tools

I’ve been meaning to share a few useful tools for getting a quick and easy market size.

First, this from Rob in the UK (shared with his permission):


I’m really getting a lot of value from your work. Thank you.

Thought I’d share this with you. It’s the UK industry classification framework which might be a useful alternative to the US version for some of your clients.

www.ons.gov.uk/methodology/classificationsandstandards/ukstandardindustrialclassificationofeconomicactivities/uksic2007

The summary of the structure is an easy way to access the real meat…

www.ons.gov.uk/file?uri=/methodology/classificationsandstandards/ukstandardindustrialclassificationofeconomicactivities/uksic2007/sic2007summaryofstructurtcm6.xls


Adding on to what Rob shared, if you’re doing market sizing research in the UK, this is worth bookmarking: www.ons.gov.uk/businessindustryandtrade/business/activitysizeandlocation/datasets/ukbusinessactivitysizeandlocation

It’s a giant, very useful spreadsheet with recent data on the number of establishments within each vertical and sub-vertical, and then for each sub-vertical it breaks companies down by employee headcount, which is a very useful way to derive a more accurate market size.

For example:

positioning services - Experiential marketing learning for independent consultants

Let’s imagine that your market is forestry products companies (listed as “02 : Forestry and logging” in this spreadsheet), and what you do for them is build software that helps them reduce the cost of complying with regulations, primarily by reducing the rework or fines that come from paperwork errors and oversights. Let’s further imagine that you have two ways of selling your software. The first is big, custom projects where you start with a generic codebase and completely customize it for the client in question. The second is where you license access to the un-customized generic version because even without extensive customization it provides real value.

As you’re thinking about the two markets for this software, you’re possibly thinking in terms of client headcount, and targeting the fully custom work at those much larger companies, and the un-customized software at the smaller ones. Knowing the number of companies within each segment is really useful!

You can get the same information here in the US, but dear God is it not nearly as easy. Here’s the step-by-step process I provide my clients:

  1. Make an educated guess about the size business that is right for your services.
  2. Make sure you know the NAICS code for the vertical you are researching. Use www.naics.com/naics-drilldown-table/ to look it up if you don’t.
  3. Use the American Fact Finder to identify how many companies in this vertical are the right size for your services:
    1. In your browser, navigate to factfinder.census.gov/faces/nav/jsf/pages/index.xhtml
    2. Click Advanced Search, then click Show Me All
    3. In the left sidebar, click Industry Codes
    4. In the field labeled Enter an industry, product, or commodity name or code, or use the Industry Code Filter Options below, type in the NAICS code for the market vertical you are investigating, and then click the Go button.
    5. The search results in the Select Industry Codes pane will update. Click the item with the name that begins with All available codes…, then click the Close button at the top right of the pane.
    6. In the left sidebar, click Topics, click Business and Industry, click Business Characteristics, and the click Employment size of establishment/firm. This will narrow down the number of search results you need to look through.
    7. In the left sidebar, click Topics, click Year, and then click the most recent year that has data associated with it. This will further reduce the amount of sifting you need to do.
    8. In the search results click Geography Area Series: County Business Patterns by Employment Size Class.
    9. The table that loads will help you understand the distribution of business size within the vertical.

I suppose the search UI for the American FactFinder1 is useful in some situations, but I’d much rather be able to pull down a spreadsheet with everything I need, just like the UK government provides.

A final market research tip: If you’re trying to get a sense of the demand for a specific skill, the above won’t help you, but job boards will. Job boards can be a really useful proxy signal about what’s happening in a market.

Quick caveat: I don’t recommend specializing in a single skill unless it’s the right moment in the shifting landscape of technology and you’re doing so as a transitional move towards something more evergreen. That said, understanding the demand for a specific skill can be a useful part of the decision making around a horizontal specialization or developing a service offering that accomplishes the same job-to-be-done as the skill in question.

In situations like this, your options for measuring the demand for the skill are 1) a direct measurement or 2) a proxy measurement.

A direct measurement would involve surveying or interviewing a probability sample of hiring managers or HR people, finding out how many are hiring for that skill, and then extrapolating from that sample to the entire population.

A proxy measurement would involve searching job boards for the skill in question and noticing:

  1. How many companies/recruiters are seeking that specific skill.
  2. What type of companies are seeking that skill. This helps you understand where in the market the demand for this skill is coming from.

The proxy measurement won’t be as exact, but it will still be very useful if you’re starting from a position of not knowing much at all about the market in question.

I hope these tools come in handy at some point for you.

-P


Notes:

  1. The data.census.gov site that’s replacing the American FactFinder seems more modern and usable, but still has the same sort of underlying complexity.