RESULT OBTAINED
03 · Define the market
Define a market before estimating its size
What must be established
A useful analysis leaves its controls visible.
- 01
Describe the need and use before the product category.
- 02
Include relevant substitutes and non-market alternatives.
- 03
Set geography, population, period and unit of measurement.
Decision checkpoint
Make the next choice explicit.
DECISION SUPPORTED
Which economic unit is being measured, for which needs, customers, offers and boundaries?
DELIVERABLE TO RETAIN
A market-boundary note that makes the calculation scope, inclusions, exclusions and revision conditions explicit.
NEXT ITEM TO INVESTIGATE
Market sizeExplore →Start with the job and the alternatives
A market can be framed around the need a buyer is trying to meet rather than around a seller's current category. The working definition records the user, the situation, the outcome sought and the alternatives that could satisfy it, including internal work, manual processes and doing nothing where relevant.
- Need and use case
- Buyer and user
- Direct and indirect alternatives
- Status quo
State the boundary as a set of observable filters
Geography, customer type, regulatory perimeter, distribution channel, value-chain level, reference period and unit each change the population counted. These filters must be written before assembling figures so that another analyst can reproduce the scope or contest a specific inclusion.
- Geography
- Population
- Value-chain level
- Period and unit
Keep exclusions and reopening signals visible
A boundary is revised when evidence shows that a material substitute, buyer group, channel or regulation changes the decision. The note should name material exclusions, the evidence missing for them and the signal that would reopen the definition, rather than silently expanding the market after a result is known.
- Explicit exclusions
- Missing evidence
- Materiality rule
- Review trigger
Application protocol
Turn the method into a reviewable decision record.
The page is complete only when another reviewer can reproduce the boundary, trace the evidence and understand what would change the conclusion.
Frame before measuring
Name the owner, decision, alternatives, unit, geography and horizon before collecting figures. This prevents a convenient source or familiar category from silently defining the problem.
- Decision and owner
- Comparable options
- Unit, boundary and horizon
Separate observation from judgement
Record every observation with source, date, method and unit. Keep transformation rules, scores and weights apart from the evidence so that disagreement can target the right layer.
- Observed evidence
- Calculation convention
- Assumption and confidence
Plan the reopening rule
State the signal, threshold, owner and review date that would reopen the choice. A robust conclusion is conditional and operational; it is not made permanent by a polished score.
- Material signal
- Decision threshold
- Owner and review date
Resources
Reuse the method and check its foundations.
- U.S. Department of Justice and Federal Trade Commission, Merger Guidelines, 2023 (opens in a new tab)Official guidance illustrating why market boundaries must consider substitutes, buyers and evidence; it does not supply a commercial market size.
- OECD, Competition Assessment Toolkit (opens in a new tab)Official toolkit for identifying regulatory, competitive and structural conditions relevant to a market boundary.
01Explicit scope
Unit, horizon and boundaries are visible.
02Qualified evidence
Source, date, method and confidence are recorded.
03Sensitivity tested
Weights and assumptions that reverse the result are known.
04Review planned
Signal, threshold, date and owner are named.
RETURN TO THE DECISION SYSTEM
See the canonical definition of marketing strategy→