Reference

Glossary

34 terms you will meet in market research reports, defined in plain English. Each term has its own link you can share.

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# AAGR (average annual growth rate): The arithmetic mean of a series of yearly growth rates. Unlike CAGR it is affected by every year in between, and it usually overstates compound growth when growth is uneven.
# Average selling price (ASP): Total revenue divided by units sold. Multiplying units by ASP is the basic building block of many bottom-up market estimates.

# Base year: The most recent year for which a report has actual, or near-actual, data. Forecasts are projected forward from it, so an unusual base year distorts growth rates.
# Bottom-up estimation: Building a market size by adding up parts, such as supplier revenues or buyers multiplied by spend per buyer. Sensitive to each assumption used.

# CAGR (compound annual growth rate): The constant yearly rate that would take a value from its start to its end over a period: (End ÷ Start)^1/n − 1. It ignores what happens in between.
# CAGR vs AAGR: CAGR uses only the first and last values and assumes smooth compounding; AAGR averages each year's growth. With volatile data, AAGR is normally higher than CAGR for the same series.
# Competitive landscape: The section of a report describing suppliers in a market, their positioning and sometimes their estimated market shares.
# Constant prices: Values adjusted to remove the effect of inflation, so that growth reflects changes in quantity rather than price. Also called real terms.

# Desk research: Another name for secondary research: gathering information from existing published sources rather than collecting it directly.
# Drivers: Factors expected to push a market up, such as rising adoption or falling prices that widen demand. Useful only when linked to how the forecast is calculated.

# End user: The final buyer or user of a product, as opposed to intermediaries such as distributors. Reports often segment by end-user industry.
# Executive summary: The opening pages of a report stating its main figures and conclusions. Best read last, once you know how the figures were built.

# Forecast period: The span of future years a report projects, starting after the base year. Longer periods carry more uncertainty.

# Historical period: The past years covered by a report. In good reports these are actual data; in weaker ones they may be back-filled estimates.

# Market share: One supplier's sales as a proportion of the total market. Depends entirely on how the market is defined.
# Market size: The total value or volume of sales in a defined market over a period, usually a year. Almost always a modelled estimate rather than a measurement.
# Methodology: The description of how a report's numbers were produced: sources, interviews, models and assumptions. Specific detail is a sign of quality.

# Nominal prices: Values in the money of each year, including inflation. Nominal growth can look strong when real volumes are flat.

# Penetration rate: The share of potential buyers who have adopted a product. A common input to demand-side estimates.
# Primary research: New information collected directly for a study, typically through interviews or surveys with suppliers, distributors and buyers.

# Rest of world: A residual line in regional tables covering everywhere not listed separately. Often the least researched figure in a report.
# Restraints: Factors expected to hold a market back, such as cost, regulation or substitutes. Sometimes called challenges.

# SAM (serviceable available market): The part of the total addressable market that a given product or business can realistically reach, given its offering and geography.
# Sample size: The number of respondents or interviews in primary research. Small samples can still be useful, but reports should state the number.
# Scenario analysis: Presenting results under different sets of assumptions, such as low, central and high cases, to show how sensitive a forecast is.
# Scope: The definition of what a report counts as part of the market and what it excludes. Two reports on the 'same' market can differ mainly because of scope.
# Secondary research: Using information already collected by others, such as official statistics, trade data, company filings and earlier studies.
# Segmentation: Dividing a market into parts, by product, application, customer, channel or geography. Segments should be mutually exclusive and add up to the total.
# SOM (serviceable obtainable market): The portion of the serviceable available market a business could plausibly win in a given period, taking competition into account.

# TAM (total addressable market): The total demand for a product or service if every possible buyer bought it. A ceiling, not a forecast.
# Top-down estimation: Building a market size by starting from a large known total and applying shares to narrow it down. Errors in each share compound.
# Triangulation: Estimating the same quantity by more than one method or source and comparing the results to test confidence.

# Value chain: The sequence of activities and businesses from raw materials to the final customer. Where in the chain a market is measured affects its size.
# Volume: A market measured in units, such as items, tonnes or subscriptions, rather than money. Comparing value and volume growth separates price effects from demand.

For longer treatments, see the explainers.