Know your market size and competition

When venture-capital investors examine a company to decide if it's worth investing money into, one of the first questions they'll ask is "how big is the market?"

You should ask yourself the same question before deciding on the product/service/offer to promote on your website.

Ideally you would want to operate in -
* Huge Market, low commoditization
or
* Small niche market that is under serviced

For example:
Let's say you're thinking about selling Plasma TVs. All it takes is signing up as a dropshipper with Ingram Micro and you're good to go.

On to conquer the huge market of people looking to buy Plasma TVs.

But hold on... Plasma TVs are a commodity by now. Commodity means "a product or resource that is traded primarily on the basis of price, and not on differences in quality or features". In other words, the market of Plasma TVs is too much saturated with other competitors and since your Sony Plasma TV is the same as your competitor's Sony Plasma TV, everyone are driving the price down to the floor.

You definitely don't want to operate in such a market. Yeah it's huge, but there's high commoditization (Google shows 70 million results for "plasma tv") leading to low profit margins.

Now, if you take your Plasma TV offering and change it to "plasma tv reviews", Google reports only 53,800 results (53,800 competing websites) with 256 searches per day for "plasma tv reviews". This would be a great niche market that is under serviced. You're likely to make more money designing a site around "plasma tv reviews" than trying to compete in the highly saturated market of selling "plasma tv"s.

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What's an easy way to conduct this market research identifying how big the market is vs how many competitors operate in the market, to identify your best picks?

Ask Google.

Google's database offers a great way to identify the number of competing websites fighting for the same keywords, vs. the number of daily searches.

Find a niche where there is a high number-of-searches (buyers) per day with low target-websites (sellers) and you're on your way to success.

Use Keyword Discovery to find these two numbers quickly & easily for any market you're going after.