The structural flaws in how most market sizing is done in India and Asia — and the primary research methodology that produces TAM/SAM/SOM numbers decision-makers can actually rely on.
In 16 years of primary market research — including engagements at KPMG, Evalueserve, and as VP of Business Research at Research Nester — I have seen hundreds of market sizing studies. I have commissioned them, reviewed them, and on many occasions, been asked to validate or contradict them as part of a commercial due diligence process.
My consistent finding: the majority of market sizing studies that reach a boardroom or an investment committee are structurally flawed from the moment the methodology is chosen. Not wrong in their arithmetic, but wrong in their architecture — built on assumptions that were never tested against the market they are trying to describe.
This matters enormously when those numbers are being used to make a market entry decision, size an investment, or set a revenue target. A market size that is wrong by 40% in either direction can be the difference between a winning strategy and an expensive failure. Here is where the problems typically begin.
The most common approach to market sizing in India and Asia is top-down extrapolation from a global or regional market figure. The logic is seductive in its simplicity: if the global market for X is $50 billion, and India represents 3.2% of global GDP, then India's market for X is approximately $1.6 billion.
This approach is wrong in almost every case where it is applied to emerging markets — not because the arithmetic is incorrect, but because GDP-proportionate market sizing assumes that consumption patterns, category penetration, willingness-to-pay, and competitive intensity are uniformly distributed with economic output. They are not.
India's penetration rate for a given category may be 15% of the US rate, not 30%. Or it may be 80% in urban Tier 1 cities and 3% in Tier 3 markets — a composite that makes the national figure meaningless for any strategy purpose. Southeast Asian markets are not interchangeable: Indonesia's credit penetration is structurally different from Thailand's; Vietnam's retail formalisation trajectory is different from the Philippines'. A regional market size that aggregates across these differences without decomposing them is not an answer — it is an average of dissimilar things.
"A market size that averages across heterogeneous sub-markets is not a number. It is a placeholder — useful for a slide, dangerous for a strategy."
The top-down trap is amplified when it is built on secondary data from industry research houses — reports that are themselves frequently built on the same top-down methodology applied one layer earlier. When a market sizing study cites three different industry reports as converging evidence, and those three reports are all sourced from the same analyst consensus, the appearance of independent triangulation is false.
I have reviewed commercial due diligence materials where the acquirer's advisors cited a market size of $4.2 billion for a specific subsegment of India's healthcare services market. The three sources used were a Frost & Sullivan report, a KPMG industry brief, and an IBISWorld estimate. All three were published within 18 months of each other. All three cited the same original source — a 2019 NITI Aayog working paper that used a GDP penetration model for health expenditure as its base. The number had been laundered through three credible-looking publications into a figure that appeared to have independent corroboration.
When we ran primary research — 40 hospital administrator interviews, 200 patient surveys across four cities, and financial analysis of 15 listed healthcare companies — we estimated the actual addressable market for the specific segment in question at $1.8 billion to $2.4 billion. The difference between $4.2 billion and $2.1 billion is not a rounding error. It is the difference between a compelling investment thesis and one that fails its IRR hurdle.
| Failure Mode | What It Produces | Where It Appears |
|---|---|---|
| GDP penetration proxy | Overestimates categories with low India penetration; underestimates fast-growing urban segments | Market entry studies, PE investment memos |
| Global analyst report extrapolation | Built for investor relations, not decision-making; understates informal economy | Strategy decks, board presentations |
| Circular citation | Three "independent" sources tracing back to one original assumption | Commercial DD, investment banking pitchbooks |
| Urban-only field sampling | Overstates national penetration in categories with strong rural/urban split | Consumer goods, healthcare, fintech reports |
| Formal sector only | Misses 20–40% of actual market in categories with significant informal competition | FMCG, logistics, education, healthcare |
A defensible market size for an Indian or Asian market is built bottom-up from primary evidence, not top-down from a global proxy. The difference in approach is not just methodological — it is a difference in what questions you ask first.
A top-down study starts with: how big is the total market? A bottom-up primary study starts with: who are the actual buyers, what do they currently spend, why do they buy it, and what would cause them to buy more? The answer to those four questions — gathered from real buyers, at real organisations, in real markets — produces a number that has a chain of evidence behind it rather than a chain of assumptions.
In practice, a rigorous bottom-up market sizing study for an Indian market typically requires:
The TAM/SAM/SOM framework is useful precisely because it forces you to distinguish between three genuinely different strategic questions. Most studies conflate them, or treat the progression from TAM to SAM to SOM as a mechanical percentage reduction rather than a substantive analytical step.
TAM (Total Addressable Market) is the total demand for a product or service category if every potential buyer who could benefit purchased it. For most India and Asia market sizing exercises, this is the least useful number — it overstates the actual commercial opportunity by including buyers who cannot be reached cost-effectively, who are already served by a deeply entrenched competitor, or who lack the purchasing power to pay a commercial price.
SAM (Serviceable Addressable Market) is the subset of TAM that your business model, distribution capability, and price point can realistically serve. This is the number that matters for strategy — and it is the one most frequently confused with TAM in market entry analyses. A global consumer goods company evaluating India entry needs to know the SAM for its price tier and distribution model, not the TAM for its category. The difference between those two numbers in India's FMCG market is often a factor of five or more.
SOM (Serviceable Obtainable Market) is the share of SAM you can realistically capture given competitive intensity, go-to-market constraints, and resource availability over a defined time horizon. This number requires the most primary research to calculate credibly — because it depends on understanding not just the size of the market but the barriers to winning within it: incumbent loyalty, switching costs, regulatory requirements, and distributor relationships.
"A market sizing study that produces only a TAM number is answering the wrong question. The question that matters for a market entry or investment decision is the SAM — and the SOM tells you whether the entry is worth making."
Before accepting a market size figure in a strategy document, investment memo, or commercial due diligence report, ask these questions. The answers will tell you quickly whether the number is built on evidence or assumption:
A flawed market size is not an academic problem. It directly affects the quality of strategy decisions that are made on its basis. In our experience across commercial due diligence, market entry analysis, and investment research, we have seen three recurring consequences of market sizing that was not grounded in primary evidence.
Market entry into structurally smaller markets than expected. When the SAM is one-third of the reported TAM — a common situation in India for categories with strong informal competition or significant price sensitivity below the entrant's price floor — companies enter with resource commitments and growth expectations that the market cannot support.
Underpricing driven by overestimated competition. When a market sizing study overstates the number of credible competitive alternatives, it produces a willingness-to-pay estimate that is too low. Companies that price on competitive assumption rather than primary WTP research systematically leave value on the table. Our willingness-to-pay research across 400 Asian enterprise buyers found that global vendors consistently underprice their India offerings by 15–30% relative to what buyers would accept.
Investment decisions made on the wrong denominator. In private equity commercial due diligence, the market size is the denominator against which a portfolio company's market share is calculated. If the market size is inflated, the implied market share looks low — which understates competitive position and overstates growth optionality. If the market size is understated, the reverse occurs. Both errors distort the investment case.
Getting market sizing right is not a research luxury — it is the analytical foundation on which strategy and investment decisions are built. The methodology required to do it credibly for India and Asia is available. The choice to use it — or not — is a deliberate one.
Abhishek Bhardwaj has personally designed and reviewed market sizing models across KPMG, Evalueserve, Phronesis Partners, Avalon Global Research, and Research Nester over 16 years. NEO Market Intelligence conducts primary research-based market sizing across 32 markets. If you are evaluating a market entry or investment decision and need a credible market size, contact us to start a brief.
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