What is your actual addressable market size (calculate an estimate)?
Don't take this lightly. If you are targeting a country with less internet users, you have to make sure you have a good reason to do so.
Case Study: When Pinterest started, they only had around 3000 early adopters during the initial months, which was not a lot. However, most smaller countries have only 1/10 of the population in the states, so in a smaller country, your service would probably only have around 300 early adopters in the beginning. There is a big difference in the speed of content creation between 3000 and 300 users.
While there is also less competition in the less saturated countries, it also means there aren't as many marketing channels or users to help you grow your company. This is a very practical way to see this problem. However, we aren't saying that either way is better than the other. There isn't a sure formula on knowing where to start, or who to start with.
Your final decision should depend on:
1. The competition
2. The total population of your target audience
3. The available (free) channels that will allow you to market your product
How to calculate market size?
There are 2 types of calculation methods. One is "top down" and another is "bottom up". Calculating market size a big key point that drives VCs to invest in your company. When they see and believe that you are tackling a huge market, they will do the calculation themselves and know what kind of upside there are with your business. In terms of the actual calculation VCs like both methods (if they are realistic), so if you can come up with both, it'd definitely help you. Also, you should also do these estimates just because it's important to do due diligence for your own future! The key is to be realistic.
Top down market estimate:
This is where you take a forecast by a market research company like Gartner or Nielson, and multiply that by the number of potential customers, and then multiply that by the % of customers you think you can actually acquire - which would then give you your addressable market.
If you want to get the revenue estimate, you then multiply that number with the price of your product which would give your revenue. Remember to always site your sources so that it's more believable.
There are 300M people in the US.
50% of those are internet users.
50% of those are obese
You can capture 10% of that market
You will make $200 off each user per year
Addressable market: 300M * 50% * 50% * 10% = 7.5M
Yearly revenue: 7.5M * $200 = $1.5B
Bottom-up market estimate:
This kind of calculation method is where you try to make the estimate according to the actual business situation instead of just taking a raw data and jamming out an estimate. This method is more realistic, so that often times VCs really like this method.
Each sales person can call at least 20 prospects a day
there are 240 working days a year
5% of the calls will convert
Each sale is $300
We have 10 sales people
Yearly revenue: 10 sales * 20 calls * 5% * 240 days * $300 = 10*20
Another good thing to do is to use your competitors' data. Say your competitor has 1M users, and you feel that they've only captured 10%. So you can say that the market has at least 10M users, and each user spends $2000, which comes out to be 20B. It's a 3rd method to add on to the 2 methods above.