Market Sizing with JTBD

Understanding the size of a market is a critical step to determining how much to invest in developing a new product for that market or if it’s worth investing anything at all.

This article shows you how to use Jobs Theory and your customer’s job-to-be-done to size a market as opposed to a product-based market definition. We’ll also explain the two key benefits of job-based market sizing:

  1. A more accurate estimation of your market opportunity
  2. Avoid the trap of incrementally improving a product while missing innovations that disrupt your business

Job-based Market Sizing
Perhaps the most popular method for sizing a market is to multiply the price of the product by the number of units sold.

The top search result on Google for “how to size a market” is this article from MaRs, an entrepreneurial advisory agency, recommending this commonly used product-based market sizing formula:

Market value = Market volume X Average value

They define “market volume” as “number of target customers X penetration rate” and “average value” as the expected price of the product or the lifetime value of the customer.

What do you do if you haven’t developed your product yet and don’t have any customers for which you can calculate the lifetime value? How do you determine the total addressable market (TAM) for new opportunities?

To size a market opportunity, instead of analyzing the products currently in the market, define the market from your customer’s point of view: a job beneficiary plus their job-to-be-done. (A detailed explanation of this definition follows below.)

Determine the value of the market by asking customers what they are willing to pay to get the job done and plot the answers on a curve from high to low. We call this graph the need curve. The area under the need curve is the size of the market, known as the securable market.

Understanding the size of a market is a critical step to determining how much to invest in developing a new product for that market or if it’s worth investing anything at all.

This article shows you how to use Jobs Theory and your customer’s job-to-be-done to size a market as opposed to a product-based market definition. We’ll also explain the two key benefits of job-based market sizing:

  1. A more accurate estimation of your market opportunity
  2. Avoid the trap of incrementally improving a product while missing innovations that disrupt your business

How Product-based Market Sizing Fails
Sizing opportunities with a product-based definition of the market is like looking in the rearview mirror and can lead to lethal mistakes.

For example, a team at Microsoft likely used traditional methods to calculate the size of the “iPod” market at its peak. Apple had sold 200 million iPods at $150. Using traditional methods, this logically appears to be a $30 billion market (market size equals the price of the product times the number of buyers). Microsoft launched the Zune into the “iPod” market, and it failed dramatically.

Jobs Theory reveals the lethal flaw in this traditional market sizing method: consumers don’t want iPods any more than they want records, cassettes, or CDs. They are not buying these products, they are hiring the products to get a job done. This is why the “iPod” market (like the “cassette” market and the “CD” market) is now rapidly approaching $0. New products have emerged (smart phones, streaming apps) that get the job done better for the customer. The Zune was doomed from the start because Microsoft defined the market incorrectly. They launched a product and used a platform that mirrored the iPod while others focused on the features and platform that would get the job done faster and more accurately.

Traditional market definitions have led to large company failures throughout business history, including the downfalls of Blackberry, Britannica and Kodak. These companies failed because there are no “keyboard device,” “encyclopedia,” or “film” markets. These are all products that declined rapidly over time. But there are (and always will be) markets to “execute jobs while mobile,” to “find information,” and to “share memories.” These are all stable JTBDs.

Apple, Google, and Facebook created three of the largest market value companies in history by helping customers get these jobs done better.

The “cassette,” “film,” and “encyclopedia” markets were all once considered large markets, but they no longer exist in any meaningful way. Markets exist not because products are being sold to customers. They exist because customers are struggling to get a job done at a price they are willing to pay.

This is a key insight from Jobs Theory: the struggle to get a job done is what causes a customer to look for a new solution. As a result, helping customers overcome this struggle is what causes a purchase and results in revenue and equity growth.

Constructing a Jobs-to-be-Done Market Definition
All of the traditional market definitions below are based on products. But products are merely point-in-time solutions that help customers achieve a goal in their personal or professional lives (i.e. execute a job, job-to-be-done, or JTBD).

Total addressable market (TAM) All units sold in a product category * price per unit
Serviceable addressable market (SAM) Units sold of a specific product type * price per unit
Potential market All customers with interest in a product offer
Qualified available market All qualifying customers with interest in a product offer
Target market The segment of the market a company pursues with its products
Penetrated market The percentage of customers buying a company’s products

For example, in order to execute the job of “creating a mood with music,” customers have “hired” a wide range of products: piano rolls, Victrolas, LPs, eight-track tapes, reel-to-reel tapes, cassettes, CDs, MP3 players, and streaming apps. While the products have changed dramatically over time, the job of “creating a mood with music” has never changed, and it will never change.

A job-to-be-done is a constant that is independent of products. This is true for business-to-consumer (B2C), business-to-business (B2B), and medical markets.

We can re-define the market from the customer’s point of view based on the customer’s job.

Product Job-To-Be-Done
Navigation App Get to a destination on time
CRM Software Acquire new customers
Phlebotomy Tube Obtain a blood sample
Car Marketplace Buy/sell a used car
Maintenance Software Ensure aircraft airworthiness
Networking Device Enable secure data use

For example, in a B2C market, navigation apps are hired by consumers to “get to a destination on time.” In a B2B market, networking devices are hired by CIOs to “enable secure data use,” and in a medical market a phlebotomy tube is hired by nurses to “obtain a blood sample.”

The Job Beneficiary and Job Executor
Your key customer is the job beneficiary or the job executor. In consumer markets, the job beneficiary and the job executor are frequently the same.

For example, a consumer (a driver) who is using a navigation app is the executor hiring the app to “get to a destination on time.” The driver is also the beneficiary of getting the job done.

In B2B and medical markets, the job executor and the job beneficiary are often different. For example, a doctor executes the JTBD of “restoring artery blood flow,” but the patient is the beneficiary. Similarly, an IT manager may execute the job of “enabling secure data use,” but the beneficiaries are company employees.

In many markets, this beneficiary/executor distinction is important because the job executor is currently part of the solution to getting the job done and new solutions will be developed over time to help the beneficiary get the job done on their own without the current executor.

For example, cloud-based applications have enabled companies to reduce or eliminate specialized IT managers (job executors) so that non-technical employees (job beneficiaries) can “enable secure data use” on their own.

In medical markets, new medical devices have been developed to allow a patient to “obtain a blood sample” on their own without a specialized phlebotomist.

Here are examples of job beneficiaries and job executors:

Beneficiaries Executors JTBD
Patients Surgeons Restore blood flow
Children Parents Manage anger
CIOs IT managers Enable data use
CFOs Accountants Optimize cash flow
Patients Phlebotomists Obtain blood sample


Once you know your key customer (the job beneficiary or job executor) and your customer’s job-to-be-done, you have a stable definition of your market that is the basis for your market sizing.

Here’s how you do it:

Steps to Estimate Market Size with Jobs-to-be-Done

  1. Identify the job
  2. Identify the job executor and job beneficiary
  3. Estimate the total number of job beneficiaries
  4. Hypothesize the range of willingness to pay (WTP) to get the whole job done among various job beneficiaries
  5. Multiply the WTP by number of job beneficiaries to estimate the market size
  6. If the estimate suggests a large enough market, conduct a survey to validate your willingness to pay hypothesis
  7. Plot the results of the survey on a graph where the y axis is the willingness to pay and the x access is the number of job beneficiaries (customers).
  8. Draw a best fit curve through the points on your graph
  9. Calculate the area under the curve

If you’d like to try this method for market sizing feel free to reach out to us at thrv for advice on the details.

To know if there’s opportunity for your company to capture share in the market you need to identify if there are unmet customer needs in the job and determine if you can satisfy them better than the competition.

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