The size of the industrial sector or industry can be determined and analyzed
through several key approaches: 1. Define the Industry Scope and Target
Market
Start by clearly defining the industry or sector you want to measure,
including the specific products or services it covers and the geographic
region involved. Then identify the target market within that industry, such as
customer segments or business types served
. 2. Use Market Sizing Methods
Common methods to estimate industry size include:
- Aggregating total annual sales or revenue figures from companies within the industry, focusing on relevant segments (e.g., only retail revenues for Amazon’s retail division)
- Using economic indicators and government data such as census or labor statistics to estimate the number of establishments, employees, or output
- Conducting surveys or using consulting firm reports to capture data on both large corporations and smaller private firms that may not publicly disclose sales
3. Segment the Market
Industry size is often broken down into:
- Total Available Market (TAM): The maximum revenue or customer base possible.
- Served Available Market (SAM): The portion of TAM that the business can realistically serve.
- Target Market: The specific segment the business aims to capture
4. Analyze Growth and Trends
Calculate historical and projected growth rates using year-over-year or
compounded annual growth rates. Consider factors like volume changes, price or
product mix shifts, and economic cycles to understand industry dynamics
. 5. Assess Operational Space Needs (for Industrial Facilities)
If the question pertains to physical industrial space size, calculate it by
analyzing current space utilization, forecasting future growth, and breaking
down space requirements by function-production, warehouse, office, employee
facilities, inventory, logistics, and compliance. Add buffers for future
expansion and consult with experts for validation
. 6. Use Industry Reports and Market Research
Specialized market research reports (e.g., for industrial gearboxes) provide
detailed size, share, and growth data for specific industrial segments
. In summary, determining the size of an industrial industry involves defining the market, collecting and segmenting reliable data on sales, output, or capacity, analyzing growth trends, and, if relevant, calculating operational space needs based on current and future business requirements
