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Medium Market Sizing Market Entry

ERP Systems

#IT #Software/IT #Enterprise Resource Planning #Retail
ProHub Comment

This case demonstrates a structured market sizing approach using segmentation by company size and pricing differentiation. The analysis effectively validates the $90B market estimate against comparable competitors (Oracle and SAP revenues), showing good triangulation methodology. The case illustrates how to break down a large addressable market into meaningful business segments with distinct pricing power.

Estimated Time 15 minutes
Difficulty Medium
Source Cornell
50 / 100
Your client is an IT company that offers ERP systems to businesses. They are currently looking to enter the convenience store market in the U.S. and has asked us to help size that market.

Clarifying Information

  1. Given: 10M convenience stores in the U.S.
  2. Assuming that 90% of the stores would use an ERP system (instead of spreadsheets), the addressable market becomes 9M stores.
  3. Small companies account for 2M stores, medium-sized companies account for 3M stores, and large companies account for 4M stores.
  4. Each small company owns 1 store, each medium-sized company owns 10 stores, and each large company owns 100 stores.
  5. Small company pricing: $10K per license per year
  6. Medium-sized company pricing: $100K per license per year
  7. Large company pricing: $1M per license per year
  8. Oracle and SAP had $40B and $25B in revenue respectively in 2018.