A company's market share - a tool or a myth? Market share analysis of an enterprise is an effective tool for a successful business.

Market volume. Please tell me what the market capacity is and what market share we occupy, such requests are often heard from company leaders. It will not be difficult for a seasoned marketer to make such a calculation, so this article is devoted to young professionals, novice marketers.

First, we need to understand the size of the market.

Market capacity = Volume of consumption of goods per capita * number of citizens in the region. (we take data from all possible sources: population census, per capita consumption statistics, etc.)

Now we calculate the market share as a percentage:

Market share = (Own sales volume (qty / year) * 100) and divide by market capacity (here it is clear, we take the sales volume from our database)

Now from practice.

• Changing market conditions
• The informal sector, which can be several times higher than the official data.
• Errors in the methodology for collecting information.
• There are errors in the collection of information

If you have calculated market share, this is the final total at the time of calculation. By and large, your manager does not need this indicator. He will not make any decisions after knowing the market share. This is a monkey's work!

If your manager still asked you to calculate market share, ask him the following questions:

• How are you going to use the obtained indicator for decision making?
• What will this information give you?
• As an indicator of market share will help you in your work.

If the management starts to mumble, find an alternative that will really help in making a decision. Since you cannot calculate the market share indicator for sure, you cannot draw any special conclusions. And besides, to work with market share, it is necessary to observe the dynamics of this indicator. And all the inaccuracy of statistical data can lead to an unexpected result. In modern marketing, you need to work not for market share, but for customer share. Select for yourself large clients who are already yours and with whom you can work. Determine their purchasing potential and calculate the share for these indicators. This will really help you to increase profits, and the market share can be calculated once a year and compared with last year's indicators and not for making a decision, but for the sake of curiosity. Good luck with your marketing!

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The information basis for calculating the market share of a product of a certain brand (for simplicity - the market share of a certain brand) is the sales volume indicators of competing products. Thus, the market share is a calculated indicator, with the exception of those cases when it is determined by an expert method by asking experts direct questions regarding their opinion on the value of this indicator for individual products.

Typically, the sales volume for calculating market share is expressed in monetary units. However, in order to exclude the influence on this indicator of prices, it is possible, where appropriate, to use physical indicators, for example, the number of cars sold of certain brands.

To determine the market share of a product of a certain brand (a certain assortment position of a certain product group), both primary and secondary data should be used. Primary data is collected and processed using the following main methods.

1. Trade audit- determination of the share of sales of various products on the basis of sales data from a representative sample of points of sale - wholesale and retail outlets.

Obviously, different retail outlets can be classified according to their location, type, sales volume, etc. The sample should represent different types of outlets. To form a sample, you must have a complete database of outlets. Only in this case it becomes possible to project the obtained data onto the entire studied market (market segment). The collection of data on the volume of sales of the studied products of competing companies is carried out.

Trade audit is usually carried out by large research agencies with extensive resources for collecting and analyzing data and having proven research technology. Such studies cost tens and even hundreds of thousands of dollars, so large companies, most often global manufacturers of food and consumer goods, can afford them.

A trade audit is carried out in the following sequence.

First, a complete census (sensus) of the trading network of the study area is carried out. The census includes any retail outlets that have the studied goods in stock and are ready for sale. As a result of the sensus, we obtain a complete description of the studied general population - the number of outlets, their classification and distribution.

Further, a sample is made from the entire trading network, a so-called statistical panel is formed. The panel is the point of sale where the sales of the investigated product will be recorded. The panel is divided into sub-samples, consisting of different types of outlets. You should first agree with the management of outlets about the possibility of the presence of an auditor and collection of information. The auditor works directly at the outlet and maintains a description of all goods of the studied category, both in the trading floor and in the warehouse. The audit is carried out cyclically. Each audit cycle reflects sales over a specific period of time.

All collected data are entered into databases. Sales volumes and market share are calculated for each brand of product and for different product groups.

Let be the total sales volumes for each competing product (A, B, C, ..., N) of a certain category in the studied outlets included in the sample, presented in monetary units for the selected period of time, and is the total sales volume of "our" product. Then the market share of product A for a sample of outlets - DRA is calculated as follows:

(6)

The market shares of all products studied in our example are calculated in a similar way:

It's obvious that .

It is possible to cover not all competing products of the studied category, but only the products of the main competitors. In this case, the calculation of the market share indicator is carried out only for the main competitors. Let's investigate the market share of "our" product and two products of major competitors. Then

This indicator does not give a picture of the market as a whole (the figure of 100% refers only to the products under study, and not to the entire set of competing products presented in retail outlets).

The sales volume for a sample of retail stores can be determined using Nielsen's regular sales dashboard, which provides an overview of all retailers in a given industry. Based on measurements on the trading panel, the Nielsen index is calculated, which determines the sales volume by product, brand for a certain period of time (usually two months). The Nielsen index characterizes the average sales volume in one store in a sample over a certain period of time:

(8)

where V- sales volume for the selected period of time; - stocks at the beginning of the period; P - supplies; B - return; - stocks at the end of the period.

Market share is calculated using the formulas above.

Market share can also be determined using indicators such as numerical weighted distribution, selection indicator, average share in turnover.

Numerical distribution(HR) is the ratio of the number of retail stores in which a given brand of product is represented to the total number of a particular type of store where a consumer usually purchases that type of product, expressed as a percentage.

CR = number of retailers of the brand Y product X / total number of merchants of the product X (%).

Weighted distribution(BP) is the market share of a product held by retailers selling the Y brand name for a given product.

BP = total product sales X retailers who sell the brand Y/ total product sales X (%).

Weighted allocation takes into account the size of stores where a particular product is presented. For example, a weighted distribution of 60% of the brand Y of a product X means that the U brand is represented in stores that provide a total of 60% of the product's sales X.

Selection indicator(IV) = BP / HR = average product sales X in stores selling the Y brand / average sales of products across all retailers. BP of 60% and CR of 20% means that the selected stores are above average size (there are not many of them, but they produce the main sales of this product). The selection indicator in this case is greater than one, namely 60/20 = 3.

Average share in turnover(SD) shows the position of a particular brand in the selected stores, and can be considered as the market share of brand Y in the total turnover of product X in the selected stores.

SD = brand turnover for product X in selected stores / total turnover of products in selected stores (%).

Then the market share (DR) is defined as DR = CR IV SD = = VR SD.

2. Diary consumer panel of regular respondents.

The respondents use a diary (entries + receipts and receipts) to record all purchases of the studied product group. The data obtained on the basis of the above calculated dependencies are translated by the researcher into market shares. Diary entries are used by many companies in different countries. Typically, such panels are balanced in terms of family size, age of head of household, household income, and geography. Panelists are recruited on a quarterly basis and added to the active list after receiving a report from them that meets the standards of the research company. For participation in the panel, its participants are encouraged. A family can be excluded from the panel on application or simply without sending three reports in a row. In Russia, some large marketing companies in Moscow are beginning to master this method, but in the regions it is still very rare.

3. The scanner panel is similar to the previous method, except for the method of fixing purchases.

In this case, the respondents are issued an identification card (or the respondent's credit card is used). A person presents (uses) a card when paying for purchases in a store that has a barcode scanner. The respondent's code is attached to the data read by the scanner. Unlike the first method, the scanner panel allows you to assess sales within different segments of the consumer market. But this method is applicable only in countries with a very high degree of trade automation - it is necessary that almost all purchases are made in stores equipped with scanners.

4. On the basis of panel surveys, primarily for consumer goods (both frequent consumption, such as food, and durables, such as televisions), the market share of products of a certain brand can be calculated using the Parfitt-Collins method using the formula

where DR is the brand's market share; ПР - brand penetration, characterized by the percentage of buyers of a given brand from the total number of buyers who, over a certain period of time, purchase products of the category to which this brand belongs, at least once; PP - re-purchase (replacement) of the brand, determined by the percentage of buyers who make

repeated purchases of a product of this brand. This is the percentage of consumers who have become adherents of a given brand; And - intensity of consumption of a brand - the ratio of the volume of consumption of a given brand by buyers who make repeated purchases (brand followers) to the average level of consumption of a given category of products.

When applying this method, all products are divided into two categories - durable goods (demand is calculated per household) and non-durable goods (demand is calculated per consumer). Brand penetration for both one and the other group characterizes the group of consumers who purchased the product for the first time. Re-purchase, which characterizes secondary demand, for short-term goods means that the consumer continues to buy the product of this brand, i.e. remains its adherent. For durables, secondary demand means returning to a given brand of product with a product change or additional purchase. This method is directly related to consumer research (bottom-up approach).

Suppose there are 10 buyers and competing products in the market X, Y, Z(Table 3.2).

Table 3.2. Market share calculation

Penetration value of the brand X is 40%, reacquisition 66% (8: 12). The intensity of consumption of the brand is calculated as I = 3: 1.8 = 1.67, where the number 3 characterizes the ratio of the quantity of the product X(the sum of initial and repeated purchases) to the number of buyers who bought this product (12: 4 = 3). The number 1.8, which characterizes the average level of consumption of this category of products, is calculated in the same way for all buyers of all studied products (18:10 = 1.8).

The market share is calculated using the formula (1) as DR = 0.4 0.66 1.67 = 44% (check: DR = 8/18, column "Reacquisition").

5. The survey of consumers (individuals and legal entities) is carried out at the place of residence of the respondent, in public places, at the workplace or in any other environment that provides for personal contact.

The respondents are asked directly what products and how often and in what quantity they buy.

To determine the market share of consumer products of everyday demand, the following structure of the questionnaire can be proposed (Table 3.3).

Table 3.3. Questionnaire structure

The product of the given answers to three questions (O CH C) by the number of buyers of each product - P characterizes the sales volume of competing products for the studied period of time.

For quickly consumable products purchased systematically, for which there are certain consumption rates (for example, 2 g of toothpaste for one brushing of teeth), it is enough to determine on the basis of a survey only the loyalty of consumers to a particular brand and the frequency of brushing their teeth.

The same applies to the calculation of the volume of sales of products of the category B2B, having consumption standards, for example, consumables, tools, etc.

• 6. When the number of analyzed products is relatively large (more than 7–10), the method of paired comparisons is used (this method is considered in the works). To conduct a market share analysis based on paired comparisons, you must:
• 1) make up all possible pairs from the products under study and prepare questionnaires for conducting paired comparisons;
• 2) using these questionnaires to conduct a survey of consumers (representatives of the consumer or business market, depending on the object of research). The respondents are asked to compare in pairs with each other products of the same type supplied to the market under study. In this case, the questions of the questionnaire can be formulated, for example, as follows: "If you had to choose product A or product B when buying, which one would you prefer?" Possible answers: "Product A", "Product B", "Products are equal";
• 3) on the basis of the data obtained, assess the market share of products of competing companies.

Assuming that steps 1) and 2) have already been completed, we will show how you can estimate the market share of each competing product using the results of pairwise comparisons.

Let's consider a conditional example. Let the respondents express their attitude to the five competing brands A, B, C, D, E (Table 3.4).

Table 3.4. Determining market share based on paired comparisons

The numbers at the intersection, for example, of the first row A and the second column B (0.61) represent the fraction of cases where brand A is preferred over brand B. Obviously, at the intersection of the second row and the first column there should be a number that complements the previous fraction to one (0.39). If the respondent finds it difficult to choose the preferred trade mark, then the numbers 0.5 are entered in the table.

It is easy to check that the sum of all preferences in the example is equal to 10 - the number of evaluated pairs. Dividing the total preferences of each brand by the sum of all preferences characterizes the calculated value of the market share indicator for the products of a certain brand.

7. Determination of market share indicators based on expert assessments.

It is carried out by direct processing and analysis of the judgments of experts, which can be employees of marketing departments of organizations, retail stores, as well as employees of consulting firms, marketing centers, marketing specialists, attracted from outside.

In addition to primary data, in the case when the market share is studied for enlarged assortment positions, and the market tends to an oligopolistic structure (oil, gas, metals, mineral fertilizers, etc.), which is typical for products B2B, you can use secondary data obtained from Russian and international statistical collections.

8. Use of data from marketing intelligence, which can be carried out in various directions.

Having data on labor productivity in the industry and the number of workers employed in production by the main competitors, and assuming that all manufactured products are sold, it is possible to estimate the production volumes of competitors by multiplying labor productivity by the number of workers.

Knowing the costs of a certain type of resources (raw materials, electricity, gas, etc.) for the production of a unit of production and the volume of purchases of resources by competitors, it is possible to estimate the volume of production of competitors by dividing the volume of resources by the cost of resources for the production of a unit of production.

Knowing the average waste yield per unit of production and the volumes of competitors 'industrial waste, it is possible to calculate the competitors' production volume by dividing the volume of industrial waste by the waste output per unit of product.

In the case of an industrial market, when there are few sellers, few buyers, and each purchase is expensive, the market size can be calculated by directly adding up data on projects announced by competitors. Enterprises operating in such markets, as a rule, publish information about their projects in the press and on the Internet (since there are few projects, they tend to tell about each, at least on their own website). Thus, by monitoring the press, competitive and thematic sites of the Internet, you can collect very accurate information about all projects in this industry for the reporting period.

Often a company has access to specific data, which can be used to accurately determine the size of the market. For example, upon sale, all POS terminals must have a special stamp that certifies that this type of POS is approved for use by the Federal Tax Service of the Russian Federation. It is also known that the right to manufacture and sell such stamps belongs to only one organization. If you can get information from this organization about how many stamps were sold per year, then by multiplying the number of stamps by the average cost of the POS, you can get the market size and your share in it (based on your own sales).

When using publicly available data, keep in mind that it can be highly inaccurate. Most Russian companies do not provide accurate information on the volume of products produced or sold and will try to circumvent existing rules (no matter what it concerns - customs, accounting or anything else).

Obviously, using different methods for determining market share will yield different results. In this case, either the most reliable method should be preferred, or the average value of the market share indicator should be used.

Imagine that you are in a marathon race, and your opponents are all triathlon champions. What are the chances that you will come in the top three? What are the chances at all that you will reach the finish line if you have never done it?

Market share: structured industries

It's the same in business. If potential competitors are triathlon champions in the field that you have chosen for business development, then it will be extremely problematic for you to take your share.

There is a simple rule of thumb. The easiest way to reclaim your share is in the least structured business sector. This means that there are no clear leaders and winners in it, you have prospects for. And all participants have insignificant shares. You just swipe literate and go.

There are a number of areas in which super champions operate, and the shares there have long been distributed: travel agencies, PVC windows, real estate agencies, etc.

Market share: how to choose your niche

When choosing your niche, pay attention to the following points

See how many players are running. Estimate how many participants and what shares they occupy.

Find out what "races" are taking place nearby. You can stay within the current business and find something nearby in a related area, and take a certain share there. The revenue from hitting such a point can grow in arithmetic progression.

And don't get involved in "fun starts." You don't have to invent artificial niches or hope they exist. You should not start with a product that is too narrow, which, according to your assumption, will definitely “shoot”. Maybe it will "shoot", but the amount of effort spent will be disproportionate to the profit received. Consulting service for agronomists via a mobile application is certainly an interesting idea. But is the game worth the candle?

Market share: for those who are at the start

Market share: seasonal business - delivering Christmas trees and parting ways

If you are in a seasonal business, you have several options for further development.

To occupy new niches to compensate for the drop in revenue. The share in pyrotechnics is offset, for example, by the share in the sale of swimming pools.

Shrink in off-season, for example, selling Christmas trees for the new year. In December, the staff of the enterprise may number 200 people. By March - zero. We deliver Christmas trees to everyone and disperse.

Market share: growth on a common wave

Sometimes it happens that market share can be won without much effort within the company. This happens in two cases.

1. You are operating in a rapidly growing market. Then a minimal set of movements and activities gives you serious growth and share. And this does not mean at all that you have achieved success. Essentially, your company is going with the flow like a poorly managed vessel.

The housing construction industry is a good example of a rapidly growing and then sharply sagging market. Until recently, it grew by 30% every year. Then there was a collapse due to the financial crisis, and the market shares of its participants began to rapidly shrink.

2. You operate in a market where two conditions are met at once:

• the size of the market is significant;
• the strength of competitors is small.

We have shown that sometimes all the aspirations to gain a share of a particular market can be unjustified due to the huge amount of resources that will have to be spent. You have received the preliminary market estimation algorithm. Before you start putting in the effort, make sure not to reinvent the wheel or float in the clouds.

Market share characterizes the position of a company in the market relative to competitors. The quantitative indicator of the market share is determined by the percentage ratio of the indicators of the volume of sales to the total volume of sales of goods of the same category in the market.

While market share is the most important metric of a company's marketing performance, there is no generally accepted perfect method to measure it. The company's share can be calculated both in the market as a whole, and within a particular segment served. The segment served is the portion of the total market volume that is being competitively contested. In a situation where the volume of sales in the market as a whole is unknown, the share is determined relative to:

• regarding the sales of a number of closest competitors;
• relative to the market leader, leading competitor.

Market share can be determined in two ways:

• in kind;
• in value terms.

Market share in physical terms (in piece terms) - the number of units of goods sold by a particular company as a percentage of the total sales in the market, expressed in the same units.

Market share by piece = piece sales (quantity)
sales (%) Volume of piece sales throughout the market (quantity)

This formula can, of course, be transformed to output either unit sales or market-wide unit sales in two other variables, as shown below:

Piece sales = Market share by piece sales (%) * Volume of piece sales throughout the market

Market share in value terms (in terms of sales). Market share by volume of sales differs from unit market share in that it reflects the prices at which goods are sold. In fact, a relatively straightforward way of calculating relative prices is to divide market share by volume by market share by piece.

Market share by volume = Sales volume (RUB)
sales (%) Total market sales

Market share through brand intensity is known as the Parfitt and Collins method (P&C method). For the calculation, data from panel surveys are used (i.e., a study conducted on a constant sample of consumers). The following formula is applied for calculations (in%):

Brand market share = Brand penetration * Brand reacquisition * Brand consumption intensity.

Penetration of a brand on the market is defined as the percentage of buyers of a given brand (who made a purchase at least once) of the total number of buyers who purchase the goods to which the brand belongs in a certain period. Re-acquisition of a brand characterizes the loyalty of consumers to this brand. It is defined as the percentage I of repeat purchases made by customers over a certain period from among those who have already purchased the given brand at least once. The intensity of brand consumption is calculated as the ratio of the average consumption of a given brand of repeat buyers to the average consumption of all groups in a given category of goods.

Calculating market share

To correctly calculate market share, it is necessary to consider certain values ​​for a specific period of time, for example, for a quarter, a year, or several years.

Calculate the total revenue (revenue) of the company. This can be done based on data from the quarterly or annual financial statements of a public company. Such statements include information about the total income of the company, as well as a breakdown of income by specific goods and services sold by the company.
If the company you are analyzing has a wide range of goods and services sold, do not look at the total income of the company, but find its breakdown by specific goods and services.

Find the total sales for the market in question. These are the total sales in the market under consideration.
Information on total market sales can be found in various market studies or through trade and industry associations. For an additional fee, specialized companies (eg NPD Group) will provide you with specific sales information in various national and international markets.
Moreover, you can add up the sales of the largest companies selling specific products or services. If several firms dominate the market (for example, in the markets for household appliances or automobiles), add the sales of those companies to calculate the total sales in the market in question.

Divide the total revenue of the analyzed company by the total market sales to find the market share of that company.

Analysts have created dozens of ways to assess the performance of a company (and new ways are constantly emerging), so very often experts forget about some of the traditional tools for assessing company performance. Market share is one of such indicators and, knowing the methods of its calculation, you can determine the efficiency of the company and predict the prospects of the company.

Steps

Part 1

To correctly calculate market share, it is necessary to consider certain values ​​for a specific period of time, for example, for a quarter, a year, or several years.

Calculate the total revenue (revenue) of the company. This can be done based on data from the quarterly or annual financial statements of a public company. Such statements include information about the total income of the company, as well as a breakdown of income by specific goods and services sold by the company.

• If the company you are analyzing has a wide range of goods and services sold, do not look at the total income of the company, but find its breakdown by specific goods and services.

1. Find the total sales for the market in question. These are the total sales in the market under consideration.

   Divide the total revenue of the analyzed company by the total market sales to find the market share of that company. For example, if a firm had $ 1 million in revenue from the sale of a particular product, and the total market sales were $ 15 million, then that company's market share was $ 1,000,000 / $ 15,000,000.

   Define the parameters of the market. Companies are looking to expand their market share in line with their strategy. In our example, BMW knows that not every car buyer is one of its potential customers. BMW makes cars from the high-end segment, so less than 10% of car buyers are its customers (luxury car sales represent a small share of the total 12.7 million cars sold per year). BMW sold 247,907 vehicles in 2011, more than any other luxury car manufacturer.

   • Be clear about the specific market segment that you intend to research. This can be a general market, so focus on total sales, or a specific market segment limited to specific products and services (in this case, compare the values ​​for a specific product / service for each company in the market).

2. Determine the annual change in the market share of the analyzed company. Moreover, you can compare the changes in market shares of all competing companies. If the market share is growing, then the company's market strategy is very effective. For example, BMW's market share and number of vehicles sold increased in 2011 (compared to 2010). This means that the marketing and pricing strategies of this company were more effective than those of competitors (Lexus, Mercedes, Acura).