Information Sources for Market Sizing

I described some general approaches to market sizing in a previous post, but one of the biggest challenges is not necessarily the overall process, but rather finding the right data.  This is true whether you’re doing top-down or bottom-up market sizing.  There are a number of valuable data sources out there, but for most US-centric market size analyses, the US Census is the best place to start.  They have a wealth of data both on US businesses and on population statistics.  The Bureau of Labor Statistics is also a great complement with its detailed information on consumer expenditures and time usage patterns.

US Census – Statistics of US Businesses

The Statistics of US Businesses is a fairly exhaustive look at firms, locations, employment, and payroll by industry.  The data tend to be released with a 3-4 year lag (e.g., 2006 data became available in 2009), but for more industries this is not a big problem since the data will not have changed too drastically in that time.

NAICS (North American Industry Classification System) codes are used to categorize firms by industry.  The codes can be a bit confusing, but there is a reference.  The NAICS codes form a hierarchy, so for example Professional, Scientific, and Technical Services (54) includes Management Consulting Services (5416) and Scientific Research and Development Services (5417) among others, with more detailed levels below those.

One challenge using this data is that NAICS codes may not correspond directly to the industry you’re analyzing, in which case you will need to do some creative slicing and dicing.

There are also great geographical breakdowns available by state, metropolitan statistical area (MSA), or county.

While there is no time series data directly available, you can construct your own time series from the historical data.

US Census – Population

Everyone is familiar with the herculean efforts of the US Census to measure the population every 10 years.  This process results in detailed demographic information that can be quite useful for business analysis.  In addition, the Census provides annual estimates based on smaller population samples every year to bridge the gaps between the more accurate official counts every ten years.

There are a multitude of different ways to access this information, which can actually be quite confusing.  The best place to start is by looking at breakdowns by specific topics, which include variables like age, education, income, and occupation.

Bureau of Labor Statistics

The BLS, which is part of the Department of Labor, is the agency in charge of providing information on labor economics and statistics.  As the description suggests, the agency is a favorite of economists and public policy analysts, but it can also be a valuable market sizing resource, especially for consumer spending and time use.

The Consumer Expenditure Survey is the premier BLS resource in my opinion.  It tracks consumer spending by income distribution, other demographic information, and spending category.  It’s great information, but I must admit that formulating the right queries can be a chore.  I’m not an expert, but I’ll provide some examples in a later post.

The American Time Use Survey can also be useful for thinking about how people divide their time among various activities.  Unfortunately, the data is available either in summary PDF tables or in raw data files which work best with statistical software like SPSS or SAS, so it can be a bit difficult to manipulate as desired.

These sources offer a huge amount of data but as a result can be a bit painful to use at first.  I’ll discuss some more detailed examples shortly, but in the meantime, I’d be interested in your comments as to which of these sources you find useful and how you prefer to access them.

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