Archive for December, 2009

The Falacy of the Total Addressable Markets

03.12.2009 No comments

The Chinese Market fallacy in business planning….

ToothpasteMost every guide to a business planning process includes a section that describes the need for identifying the potential market size, sometimes called the total addressable market.  The exercise usually starts with some governmental or Gartner-like information source to identify a global or regional segment.  The planner is then instructed to make some assumptions that better restricts the addressable market, but typically the remaining market is still huge.  Based on this information, inexperienced (or deceiving)  business champions will compare their first few years cost against some percentage of this huge market as justification for proceeding with the business plan which I believe results in the common market penetration mistake I call “Chinese Marketing”.  This is a term that I intend to push into the business vocabulary:  “Chinese Marketing” is the fallacy that you can create a successful business based on getting a very small percentage of a huge market. Read more…