In order to improve overlay measurement, product marker gratings on a substrate are measured in a lithographic apparatus by an alignment sensor using scatterometry. Then information relating to the transverse profile of the product marker grating, such as its asymmetry, is determined from the measurement. After printing an overlay marker grating on a resist film, the lateral overlay of the overlay marker grating with respect to the product marker grating is measured by scatterometry and using the determined asymmetry information in combination with a suitable process model. The alignment sensor data may be used to first reconstruct the product grating and this information is fed forward to the scatterometer that measures the stack of product and resist grating and light scattered by the stack is used for reconstruction of a model of the stack to calculate overlay. The overlay may then, optionally, be fed back to the lithographic apparatus for correction of overlay errors.