How to spot the type of market sizing approach

Hi,

Thanks for the question! The video you shared does a great job of laying out the different market sizing approaches, particularly around the 1:22 mark, where it explains the Top-Down, Bottom-Up, and Hybrid methods. Here’s how I recommend determining which approach to use:

• Top-Down: This is most appropriate when you have reliable macro-level data or are estimating the size of an industry. For example, when sizing the fast-food market in the US or estimating the revenue of a large market leader like McDonald’s.
• Bottom-Up: Use this when you have detailed, unit-level data available. It’s effective for estimating smaller, specific units and then scaling. For instance, calculating the revenue of a single McDonald’s restaurant and extrapolating from there.
• Hybrid: A blend of both methods. This works when you need to combine top-level industry data with granular unit-level estimates. For example, determining the number of McDonald's restaurants and then multiplying by average revenue per unit.

The approach depends on the data you have: Top-Down for broader data, Bottom-Up for detailed unit data, and Hybrid for a combination of both.

Best,
Stefan