Market sizing
Case study · analyst-toolkit
Two sizings, the gap between them, and what each assumption would have to become.
Thirteen figures, four top down factors and nine bottom up drivers. The gap, and what each assumption would have to become, follow them.
Problem
A market is sized twice, top down as a universe narrowed by shares and bottom up as a sum of segments, and the disagreement between the two is the only quantity in the exercise nobody assumed, which averaging them throws away.
Method
Top down against bottom up, reconciled by inversion rather than by judgement: the instrument takes each assumption in turn, holds every other assumption still, and computes the value that one assumption would have to take for the two totals to agree.
What it does
Four top down factors and three bottom up segments of three drivers each, all editable, with the two totals, the gap and the gap as a percentage of the top down total above them, and one row per assumption giving its current value, the value it would have to take and the multiple between the two.
What it refuses to do
It refuses to produce a market size, so there is no average, no midpoint, no range and no recommendation about which sizing to believe, because the difference is the finding.
It refuses to imply something impossible, so an implied share above 100 percent, or any negative implied value, is marked infeasible with the reason written out.
It refuses to scale a zero, because a factor sitting at zero cannot be multiplied into anything else, and the table says so in place of the implied column.
It refuses the impossible segment: where the other segments already sum past the top down total, every driver in the segment being solved is marked infeasible and the two figures that make it so are named.
It refuses negative and unreadable inputs, reading anything that does not parse as a number, or parses below zero, as zero.
It refuses to claim a market it has not measured, so every money figure is labelled EUR, illustrative, in both totals and in the readouts.
In closing
The gap between two sizings is the most informative thing either of them produces.