What is a market?

A market comprises all the entities (people, businesses, governments) with the interest and means to buy a product (or category of product). Having "interest" means that the entity perceives value in the product. Having the "means" indicates that the entity has access to the product and, if required, can pay for it. "Customers" are the part of the market that has purchased your product. Unfortunately, the terms "market" and "customer" are often used interchangeably. In product management literature, there is often undue emphasis on understanding customers, often at the expense of understanding the part of the market that hasn't yet bought a product.

Understanding the needs and desires of markets is difficult. There are specialized firms called research and advisory firms, like Gartner and Forrester, that specialize in gather market data, which they sell to their clients. While some of these reports may cost thousands of dollars, it is very unlikely that most companies could generate the same quantity and quality of data for anywhere near this price. As a PM, you should feel comfortable asking our organization to purchase the market intelligence you need to do your job well. The use of market data generated by PMs or anyone who is not an expert should be considered very risky.

Understanding the market your product serves allows you to align the product team an usually to leverage market analysis done by others. Sometimes our product creates a new market. For example, before the iPhone, there wasn't a smartphone market. GoPro invented a new category of camera. Sizing the global market in these cases is difficult and requires experience and competencies most companies do not possess. In these cases, you can find an established market and make some assumptions regarding how its key stats can be used to estimate the new market you plan to create, e.g., there X million cell phone users in the world, we believe 20% of them will switch to a smartphone in the first year after launch.

If you're developing a product for a market not covered by market research firms, you can attempt to build a simply model based on a market they have analyzed. For example, you may assume that your market is roughly 40% of an established market.