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Chapter 1. Franchising as Entrepreneursh... > Opportunity Recognition: Market Size

Opportunity Recognition: Market Size

Once you understand who the target customer is, you must calculate how many there are and then determine more specifically the size of any given local market. In other words, is the juice worth the squeezing? Do you believe enough customers will buy your product or service to make the potential for wealth creation reasonable? Understanding market size helps you to understand the scope of the opportunity—is it local, statewide, national, international, or global? When looking at market size in the United States, keep in mind that there are 300 standard metropolitan statistical areas (SMSAs), which is the U.S. government’s title for a metropolitan area. International means having a presence in a country other than the home market. Global means having a marketing perspective that includes many national markets in a rational development and management plan. Market demand is time-dependent. Consumer trends imply changes over time, and therefore your measurement of market size must look into the future.

Jiffy Lube determined market size by the following calculation: When the company was started, there were approximately 120 million cars and light trucks in the United States. The average car owner required preventive maintenance service 2.8 times per year. Therefore, market size was defined as 336 million services per year.


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