Market study: the methodology to validate your concept

Quick answer. A serious market study is built in five steps: define the scope, gather secondary data, run customer interviews, analyse the competition, then conclude on the opportunity. The methodological rule: cross-check a top-down estimate (public INSEE sources) with a bottom-up estimate (volume times price) to produce a defensible revenue assumption.

Many founders confuse a market study with a hunch validated by three friends. The real question is not whether the idea is liked, but whether it addresses a large enough market, at a sustainable price, against an identified competition. A serious market study answers these questions with a methodology and traceable figures, not impressions.

Good news: you can run it yourself, without an expensive research firm, using free and reliable sources. This article sets out the methodology step by step, as we see it work in the start-up files we support. The final goal is clear: produce quantified assumptions that hold up and that will feed your financial forecast.

A market study done in-house remains fully valid if it is structured and quantified. It helps you arbitrate a project, convince a lender and set realistic targets. Its rigour matters more than its length.

Here is the full procedure, in order:

1. Define the market scope and the target.
2. Gather secondary data (public sources).
3. Run customer interviews (field survey).
4. Analyse the competition and price positioning.
5. Conclude on the opportunity and feed the forecast.

A study starts with a precise question, not a scattergun collection. Ask yourself what you must prove to decide whether to launch the project. The typical question is: in a given area, are there enough customers of a given profile willing to pay a given price for my offer?

Then define the target with at least three criteria: customer type (consumer or business), the geography served and the precise segment. The sharper the target, the more usable the data. A blurry target produces a blurry study, useless for the forecast.

Sizing is the quantitative core of the study. Three levels nest together: TAM (total addressable market), SAM (the addressable market your offer actually serves) and SOM (the share you can reasonably capture at launch). Each level narrows the previous one using concrete criteria.

The methodological rule is always to cross two approaches. The top-down approach starts from public macro data and drills down to your scope. The bottom-up approach starts from your field: number of potential customers times an estimated average basket. When the two converge within an order of magnitude, your estimate is credible.

For illustration only: if an area has several thousand potential customers and your capacity lets you serve a few hundred in the first year, your SOM sits at that level, not at the total market level. These figures are illustrative and must be replaced with your own data.

The field survey tests your assumptions against reality. It combines two parts. The quantitative part is a broadly distributed questionnaire that measures frequencies and intentions. The qualitative part relies on in-depth interviews that explain behaviours and reveal what a questionnaire cannot capture.

Mind the sample: interview people representative of your target, not just your friendly circle. Beware classic biases, especially the courtesy bias, where people answer what pleases. A few rigorously conducted qualitative interviews already teach a lot, often more than a poorly targeted mass survey.

Personas link the quantitative to the qualitative. Limit yourself to two or three typical profiles, each described with a main need, a buying context, a decision journey and a willingness to pay. A well-built persona avoids targeting everyone, which amounts to targeting no one.

Competition analysis is not limited to direct competitors. Indirect competitors (substitutes, alternatives, the customer status quo) often weigh just as much. List both families, then compare them on consistent criteria: offer, listed price, target, channel, reputation.

Build a positioning map on two axes (for example price and service level). It visually reveals crowded zones and open spaces. The price benchmark, in particular, keeps you from setting a tariff disconnected from market reality. An honest map also shows when a market is saturated, valuable information before investing.

Trade-off: cost-based or value-based pricing. Cost logic adds up your charges and a target margin: it is safe but often caps the potential. Value logic starts from what the customer will pay for the perceived benefit: it frees up margin but requires a real understanding of the persona. In practice, test several price levels during the field survey, then arbitrate by crossing the cost floor and the perceived-value ceiling.

The synthesis turns the study into decisions. It fits in a few pages: market size retained, positioning, price, priority targets and identified risks. This is the document that justifies your assumptions to a banker or a partner.

Above all, the study only has value when connected to the figures. The SOM and the retained price become your first-year revenue assumption. That figure then feeds the forecast balance sheet and the financing plan. A market study disconnected from the forecast remains a style exercise. Connected, it becomes a steering tool.

France has high-quality public sources, free and usable without subscription. The reflex to build is always to prefer a primary source over a second-hand article. Here are the main ones and their use.

For sector figures, INSEE remains the first-rank official reference, and Bpifrance Creation provides a reliable methodological framing for founders. Crossing these two sources already covers the essentials of credible sizing.

Management ratios by profession: complementary, non-official benchmarks#

To compare your profitability assumptions with a sector, there are compendiums of ratios by profession. Be careful about their status: these are private sources, not official ones. The annual review Chiffres et commentaires, published by the FCGA (the French federation of approved management centres), publishes ratios covering about 75 professions and 11 sectors, with intermediate management balances presented by revenue bracket. It is this publication, and not the Observatoire de la petite entreprise, that details sector intermediate management balances.

Not to be confused: the Observatoire de la petite entreprise, run by the FCGA and Banque Populaire, tracks small-business activity through the Indice TPE and the Barometre, over a scope of 54 professions and 12 sectors, without intermediate management balances by revenue bracket. Both publications are useful to position a project, but they come from a private federation: check the reference year and the exact scope in the current catalogue, and keep INSEE and Bpifrance Creation as your first-rank references.

Some projects require adjustments. A highly specialised B2B activity will rely more on INPI open data and qualitative interviews than on mass statistics, because the target population is narrow and individually identifiable. Conversely, a local retail business will favour INSEE local data (catchment area, demographics, neighbourhood incomes).

An innovative project with no pre-existing market cannot rely on historical series. You then have to reason by analogous markets and pure bottom-up, accepting a wider margin of uncertainty. For a liberal profession, also connect your study to the applicable tax framework: see our pointers on the special BNC regime for liberal professions.

The underestimated risk: confusing stated intention with real purchase. In questionnaires, many respondents say they are interested without ever acting. Systematically weight intentions downward and confront them with observed behaviours. A study that overestimates demand produces an unviable forecast, and it is one of the most frequent causes of gaps in the first year.

Another point of vigilance: open data is powerful but dated. Check the reference year of each dataset and do not mix different vintages in a single calculation. Also be wary of source status: a compendium of ratios published by a private federation does not carry the same evidentiary weight as an INSEE statistic. Finally, keep traceability of your sources: a lender will ask where your figures come from.

Our read. A market study is not an academic exercise separate from the figures: it is the raw material of the forecast. In the start-up files we support, the most frequent blockers come from an inflated SOM or a price set without a benchmark. A rigorous methodology upfront avoids months of blind steering.

We also see founders who are very solid on the product but who have never crossed top-down and bottom-up: their first-year revenue then rests on a single fragile calculation. The role of start-up support is precisely to challenge these assumptions before they become financial commitments. For more advanced structures, this logic continues into a growth strategy and valuation and monitoring through Power BI dashboards.

Recently, supporting a founder on the forecast illustrated this point: the initial study announced a very large capturable market, but the bottom-up approach (customers actually served per week times the basket) brought the target down to a third. Retaining the prudent assumption made it possible to calibrate a realistic financing need rather than an unviable target. This work is part of the forecast-support engagement we carry out as a chartered accountant registered with the Order of Chartered Accountants, and does not replace a personalised analysis of your situation.

Hayot Expertise tip. Build your study so it leads to a single defensible figure: your first-year revenue. If you cannot explain it line by line to a banker, the study is not finished.

• Market scope defined and target set (customer, area, segment).
• TAM SAM SOM estimated and cross-checked top-down and bottom-up.
• Secondary data sourced (INSEE, data.gouv.fr, INPI, BODACC) with vintage.
• Direct and indirect competitors mapped with a price benchmark.
• Field survey documented (questionnaire and interviews, sample described).
• Price positioning justified (cost and value).
• Synthesis connected to the forecast and sources traced.