The firm occupies a market share greater than 4. Methods for determining the size of the market. The market share of the company. Scope of market share indicator

marketing coordinator
department of electrotechnical
and telecommunication systems,
ZM Russia, Moscow

Determining the volume and market share is one of the main tasks of a marketer.

There are three components to this task:

The market volume is usually understood as the total cost of all goods of a given group sold to consumers of the market under study for a certain period of time.

Market share is the percentage of products with a certain brand name. Based on the regular measurement of the market share, it is possible to assess how the company's market positions are changing, how effective its marketing efforts are.

Market potential is the maximum market size with the greatest marketing activity of all companies in this industry sector of the market, under a certain state of the environment. marketing environment. This is a theoretically calculated value, which is never achieved in reality.

Market potential plays an important role when compared to the current market size. Based on this comparison, there is clarity regarding the possible expansion of the market. And these opportunities are one of the main indicators of market attractiveness when making decisions on entering this market.

Methods for determining the size of the market may vary depending on:

Before determining the size of the market, you need to clearly understand what exactly we mean by this market - to outline the boundaries. This includes specifying the following parameters:

It can be one city, a specific region or several regions, all of Russia, etc. At the same time, if the market is heterogeneous and is divided into segments, the market volume must be determined for each segment separately. The scores obtained are then summed up.

For example, if we are researching the coffee market, then we need to clarify what types of coffee we are considering - instant coffee, ground coffee, coffee beans, coffee drinks, etc.

This article will show the methods for estimating the size of the market, which are most often used by Russian companies.

Methods for determining the size of the market can be divided into statistical, indirect and direct accounting methods.

Statistical methods for determining the size of the market based on primary data

To measure the volume of the consumer market, statistical methods are used based on:
1) retail audit;
2) a survey of consumers based on a statistical sample.

Retail Audit is a measure of the flow of goods from a producer to a consumer through a retail network. The method is based on the assumption that the entire volume of the consumed product was purchased in stores, therefore, fixing and summing up the number of sales of all stores (as well as markets, kiosks and other types outlets), we will get the market volume of this product.

Retail audit allows you to determine:

Retail audits are carried out by large research agencies with extensive data collection and analysis resources and mature research technology. Agencies are the most popular in Russia AC Nielsen, MEMRB,"Business analytics". Such studies cost tens and even hundreds of thousands of dollars, so they can be afforded mainly large companies, most often global producers of food and consumer goods.

The retail audit is as follows:

1. The Agency makes a complete census (sensus) of the trade network of the study area.

The census includes any retail outlets that have the studied goods in stock, ready for sale. The census usually takes into account the specific features of each outlet: its type, location, sales area, assortment, number of cash registers, number of sales staff, etc.

To take into account the dynamics of the trading network, the sensor data is constantly updated.

As a result of the sensation, we get a complete description of the general population under study - the number of outlets, their classification and distribution.

Panels are those stores where sales of the researched product will be recorded. The Agency agrees in advance with them on the possibility of the presence of its auditors and the collection of information.

The panel retains all the properties of the general population and is compiled taking into account the proportional importance of individual trading channels or regions for the entire market. The panel is divided into sub-samples, consisting of different types of outlets. Each subsample has its own extrapolation factor to display the entire trading network. The data collected from the panel is extrapolated to the entire trading network to display the situation in the entire market.

The panel is permanent, except in cases of major changes in the city's sensus. Outlets that for various reasons drop out of the trading network are replaced with equivalent ones.

3. Data collection.

Data collection is carried out by marketing auditors. The auditor works directly at the point of sale and keeps a description of all goods of the category under study, located both in trading floor as well as in stock. The audit is carried out cyclically. Each audit cycle reflects sales over a two-month period.

During the audit, for each unit of goods, such data as the name of the product, trademark, manufacturer, price, quantity of goods in the warehouse and on the sales floor, the main characteristics of the product (weight, taste, number of units in a package, type of packaging, etc.) .P.).

The duties of the auditor also include determining the number of purchases made by the outlet for the period, obtained from invoices and other documentation; comparison of current and past purchases of goods by this store; comparison of invoices with the actual quantity of goods in the warehouse.

The data is entered into specially designed questionnaires adapted for each outlet of the panel.

4. Calculation of reporting indicators.

All collected data is entered into databases and processed using software. For each brand of goods and for different groups of goods (according to individual requirements customer) the following indicators are calculated:

Number of sales of a particular brand (sales volume in quantitative terms)= quantity of goods in stock at the beginning of the period - the balance of goods in stock at the end of the period + purchases made by the outlet for the period. The number of sales is measured in the same units as the product (kilograms, liters, pieces, etc.).

Quantitative share of sales of a particular brand in relation to the total sales of products in this category= (number of sales of a particular brand / total number of sales of all other brands of the product) x 100%.

Monetary sales volume of a particular brand= the number of sales of a particular brand x the price of this brand in the study period.

Cash share of sales= (monetary sales of a particular brand / monetary sales of all other brands of the product).

Market share is determined using indicators such as weighted and numerical distribution, selection indicator, average share in turnover.

Numerical Distribution (NR) is the ratio of the number of stores that carry a given brand of product to the total number of a particular type of store where a consumer typically buys that type of product, expressed as a percentage.

PR = number of retailers of brand Y of product X / total number of retailers of product X, (%).

Weighted Distribution (WP) is the market share of product X held by retailers selling brand Y.

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

A weighted distribution takes into account the size of stores that carry a particular product. For example, a weighted distribution of 60% of brand Y of product X means that brand Y is represented in stores that together account for 60% of product X's sales.

Selection Indicator (SW)= VR / PR = average sales of product X in stores selling brand Y / average sales of product X across all retailers.

A VR of 60% and a PR of 20% means above-average sized stores are selected (there are not many of them, but they produce the main sales of this product). The selection indicator in this case is greater than 1, namely 60/20 = 3.

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

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

Market share (DR) = HR x IV x SD = HR x SD.

5. Analysis of the received data.

Based on this analysis of market share, it can be concluded that a company can increase the availability of a product and the market share of this product in the following ways during the distribution process:

-	The choice of a larger number of outlets (in this case, the intensity of distribution increases).
	Choice of other larger outlets. With a constant distribution intensity, stores with a large sales volume for this product are selected. This is expressed as an increase in the selection indicator. If it is greater than 1, then stores with above-average sales are selected. We can say that with a constant distribution intensity, the weighted distribution increases.
	Increasing sales of the brand in selected stores. This is expressed in an increase in the average share in the turnover. Possible ways to achieve this are more frequent store visits by the manufacturer's sales representatives and improved sales mechanisms.

Audit Limitations:

-	Research is not carried out at points wholesale trade, Catering, imported trade with machines.
	Since the audit is carried out on a sample basis, the data obtained has a certain margin of error and is not 100% accurate. This should be taken into account when evaluating data and trends.
	Russian feature is that in district/regional cities, purchases are made not only directly by citizens, but also by residents of nearby regions. Thus, goods tend to "spread", i.e. the market volume determined by us for a given territory in reality turns out to be somewhat smaller due to purchases from residents of other territories that are not related to the studied area.
	The difference between supply and demand. Sometimes the supply of a product on the market does not mean at all that there will be a demand for it. Therefore, sellers may be faced with the issue of warehouse congestion, which will either lead to a reorganization of the warehouse or to the movement of goods to another location. Naturally, such urgent and large-scale changes cannot be taken into account by the retail auditor.

The benefits of an audit:

-	clearly illustrates the main position in the market of various categories of goods;
	allows you to determine the share of a particular brand in the market;
	gives you the opportunity to evaluate how your brands are presented in comparison with competitors' brands;
	shows the level of distribution and lack of goods in the warehouse in retail;
	allows you to identify new development opportunities;
	allows you to evaluate competitive activity;
	helps to find the best ways to use resources for the best presentation of the product;
	helps to identify and assess the threat posed by new players in the market.

Survey of consumers based on a statistical sample

The size of the market can be determined by asking customers, for example, whether they bought a product in a certain period of time, and then multiplying the number of positive answers by the average purchase volume.

The survey can be complete (related to the entire population) or selective. A full survey is conducted if the population is relatively small (for example, a highly specialized segment industrial market) or if very detailed information is required. If a sample is made, then only a part of the representatives of the general population is polled, and the results are approximated to the entire population with a given degree of accuracy.

The representativeness of the sample is a mandatory characteristic. This means that all essential characteristics of the population are presented in the sample in the same proportion in which they are distributed in the general population.

Significant characteristics are those that may have an impact on the results of the survey. The sample can be representative if the following requirements are met:

The sample size greatly depends on what limits of accuracy and reliability are needed in a given study. That is, we must specify indicators such as confidence interval and confidence level.

Confidence interval (Tdov, %) is the sampling error you specify. For example, if you set a confidence interval of 3% and the answers to a particular research question are 48%, this means that even if the entire population is surveyed, the real value will fall between 45 (48-3) and 51% (48+ 3).

Confidence probability ( Rdov, %) shows how confident you can be in your results and that the characteristics of the sample match those of the entire population being studied. In other words, how likely is a random answer to fall within the confidence interval. In the vast majority of studies, 90-95% is sufficient.

If we combine the confidence probability and the confidence interval, then we can say that the answers to the question with a 95% probability will fall between 45 and 51%.

When approximating the results for the entire population, it is assumed that the indicator under study has a normal distribution. To assess the accuracy of the study, the standard deviation (s) is used, calculated by the formula:

where p is the expected proportion of positive responses. This value is not exactly known in advance, but it affects the sample size. The largest sample size would be required if the answer options were distributed in a ratio of 50 to 50%;
q = 1 — p ;
N— sample size.

An important property of a normal distribution is that 95.4% of all observations lie between the sample mean and 2. This means that at a 94.5% confidence level, the confidence interval will be ±2 of the mean. Other relationships between confidence probability and confidence interval are shown in the table.

This pattern is true for any normal distribution. The factor by which we multiply the standard deviation to get the boundary of the interval is called z-value, and a table like this one is also called z-table.

EXAMPLE. The company sells a software product for automating the workflow of enterprises. This product is only suitable for large and medium-sized enterprises. The product is licensed by the number of workstations. Known data on the average purchase of this product (the cost of the total number of automated jobs) for large and medium-sized enterprises. Based on a statistical sample, it is required to determine the volume of the product market for a certain period in this region.

According to the conditions of the problem, the general population is limited to enterprises of only large and medium scale. Let's define: large enterprises - with more than 1000 employees, medium - from 500 to 1000 people. According to statistical reference books, we find the addresses and other details of enterprises, as well as how many such enterprises are registered in the region under study at the end of the study period.

Let's say the number large enterprises- 1000, medium - 5000.

If you can not find directories with such information, you can contact the services of a local marketing / information agency.

Further, the task is reduced to compiling a random sample from the found enterprises and getting from its participants an answer to the question: did their enterprise buy similar software products for this period of time?

Since the volume of purchases from large and medium-sized enterprises is different, the general population must be divided into two strata and each stratum should be examined separately.

We define the required accuracy of the study as Rdov= 90% and Tdov= 5%. This means that for our sample, we want to determine the number of enterprises that bought the product in the entire general population with a reliability of 90% and a maximum error of 5%. According to the z-table, these parameters give us the following information: the standard deviation multiplied by 1.65 (z-value corresponding to a percentage of observations of 90%) should be equal to 5%.

From here we find that the standard deviation in our random sample should be equal to:

5% / 1,65 = 3,03%.

Let, based on our experience and knowledge of the market, we assume that the product could be bought by approximately 20% of the enterprises of each stratum, that is, the parameter p equal to 20%, respectively q = 80%.

We substitute these values ​​into the standard deviation formula (1) and find the required sample size:

where N = 174 enterprises.

There is another nuance here. We have just found the sample size assuming that the population size is unboundedly large. In our case, this is not the case, and the number of enterprises is limited. Therefore, the required sample will be smaller.

There is a formula that allows you to adjust the required sample size if the size of the population is known:

We consider the new sample size.
For medium enterprises: N' = 174 / (1+ 174 / 5000) = 168 enterprises.
For large enterprises: N' = 174 / (1+ 174/ 1000) = 148 enterprises.

As can be seen, the smaller the population, the greater the difference in sample size.

So, we determine the number of enterprises that bought a software product by asking the participants of the study the question: “Did you buy similar software products during the period t?”

Answer options:

-

We summarize the results in a table. For example, the answers were distributed as shown in Table. one.

Table 1

Poll results

Strata		Number of enterprises that answered "No"	Total number of surveyed enterprises
Medium enterprises
% from the sum
Large enterprises
% from the sum

We see that in our sample, 67 medium-sized businesses bought the product. This is 40% of the general population. So, with a probability of 90%, we can expect that in the entire general population the product was bought by 35 to 45% of enterprises, i.e. from 1750 to 2250 enterprises (35 and 45% of 5000 respectively).

Knowing the average purchase volume for each group of enterprises, we determine the market volume in each stratum by multiplying the number of enterprises by their average purchase volume. The average purchase volume can be determined from our own sales data.

We enter the calculation data in Table. 2.

table 2

Calculation of market volume

Strata	Number of enterprises that answered "Yes"	Average purchase volume of a product, thousand dollars	Market volume, thousand dollars
Medium enterprises	from 1750 to 2250
Large enterprises	from 150 to 250

The total volume of the market of medium and large enterprises is obtained by adding the indicators of the two strata.

So, with a probability of 90%, the market volume of our product is in the range from 67,500 to 92,500 thousand dollars.

As you can see, the total error is quite large. However, the required accuracy is determined from the purpose for which we define the market size.

For example, the goal is to determine our market share.

Let our company's sales amount to $6 million, of which we sold $3.2 million worth of product to medium-sized enterprises, and $2.8 million to large ones.

So, in the market of medium-sized enterprises, our share is in the range from 4.7 to 6%:
(3.2 million / 67.5 million) x 100% = 4.7%.
(3.2 million / 52.5 million) x 100% = 6%.

Such an error in determining the proportion is usually acceptable. If not, we take a larger sample.

In real research, it is not so much the accuracy of the obtained values ​​that is most often important, but the possibility of comparing these values ​​for different periods of time. Therefore, the confidence interval is selected based on the possibility of comparing the values. That is, if next year we use the same method, then the error will be the same.

Differences in sample size are also not always important. For example, sample size is of fundamental importance when determining market shares, and it is necessary to study the situation with competitors occupying a share comparable to a confidence interval (say, 2-5%), or when several groups of products are studied and analysis is required for each group separately.

In industrial market research, the main difficulty is to find required amount respondents. In order to interest the respondents, as a rule, they are offered a certain reward - gifts, discounts, participation in sweepstakes.

In surveys, for greater efficiency, several goals are set at once in addition to determining the size of the market, for example, determining preferences, further intentions of the consumer, creating a database of potential customers, etc. Therefore, the questionnaire is not limited to one question.

Indirect Methods

In the absence of statistical data or lack of time and money for statistical research, indirect methods are used. These methods estimate the size of the market very roughly. Therefore, they must be applied, guided by the following rules:

share method.

If there is data on the size of the market of the entire industry, then it is possible to estimate what share our product class has in the entire industry.

For example, let's estimate the market size electronic document management. Electronic document management refers to the market of automated software systems. From open sources (IDC report Services 2005—2009 Forecast and 2004 Vendor Shares- these are paid studies, but some of their fragments are published openly) it is known that the size of the market for automated software systems in Russia in 2004 was estimated at $ 1.9 billion. The cost of document management is about 4-5% of all costs for the implementation of automation systems (according to expert estimates of participants in this market). Consequently, the volume of the electronic document management market in 2004 is from 76 to 95 million dollars. If we compare this figure with the data of special studies, for example, market research by the RBC agency (RosBusinessConsulting, an analytical report "The market for electronic document management systems in Russia", Moscow, 2004), we get approximately the same values.

Probabilistic method.

For example, you are selling software. Your potential customers are commercial enterprises of certain sizes and industries operating in a certain territory.

To determine the size of the market, you need to answer a number of questions. In responses, it is desirable to use data, relying on as realistic arguments as possible. The accuracy of the probabilistic method depends entirely on this.

Question 1. How many potential consumer firms know about my firm and product?

Let's say about 10%.

Question 2. How many potential consumers who know about my company and the product can use the product from a technical point of view?

Let the answer be 70%.

Question 3. How many potential customers who know about my company and product can use the product from a technical point of view, how many of my company is suitable as a supplier of goods? Your company may not suit them because of its reputation, location of the office, language of communication.

For example, it is 25%.

Question 4. How many potential customers who know about my firm and product can use the product from a technical point of view, and how many potential customers who are eligible for my firm as a supplier of goods can afford to buy the product?

For example, 10 out of 100 companies will actually pay for the program, the rest will be acquired illegally. But if the program is protected by some kind of key, this will not happen, the program simply will not be bought without a license.

Let's say the answer is 10%.

We multiply the probabilities: 0.1 x 0.7 x 0.25 x 0.1 = 0.00175.

This means that our program occupies 0.175% of the market.

Let's say our firm sells $200,000 a year.

Therefore, the market size is (200,000 / 0.175) x 100 = $114,285,714 = $11 million.

The market size can be estimated based on the total number of customers who contacted us and their average purchase amount.

For example, a manufacturing company commercial equipment wants to estimate the market share of POS terminals for 2004. It is known that the average time to make a purchase decision, i.e. the time difference between the date the client applied to the company and the date of the actual purchase is 2 months (an indicator typical for the industrial market). The company itself sells cash terminals and keeps records in the CRM system.

Suppose a marketer receives the following data from a CRM system:

average purchase amount at POS terminals — $7,000 ( Spr).

The number of clients (companies) who applied to the company regarding cash terminals in the period from November 1, 2003 to November 1, 2004 is 200 (). We take such dates in order to take into account the time of decision making. That is, we assume that customers who applied to the company during this period will make a purchase only after 2 months, namely from January 1, 2004 to January 1, 2005.

The market volume is determined by the formula:

where is the volume of the POS market in 2004 in monetary terms. The numerator of the formula is the market size, provided that all customers who bought terminals in 2004 (from us or from competitors) called our company beforehand;
- correction factor. This is an adjustment for clients who, for various reasons, did not call our company. The coefficient is determined by experts or based on customer surveys. For example, we know that only 90% of customers know our company and our cash registers. Of these, about 70% will definitely call us before making a purchase somewhere else to find out our conditions (it is clear that this percentage will be higher for recognized market leaders than for small companies).

Based on this, kpopr is equal to 0.90 x 0.7 = 0.63.

That is, the number of those who called us is 63% of the actual number of customers who bought cash registers.

Total = ($7,000 x 200 customers) / 0.63 = $2.222 million

Expert survey.

Market size is often determined based on a survey of experts.

Experts can be specialists of the enterprise, industry consultants or specialized organizations, as well as consumers of products.

There are several methods of expert surveys (Table 3).

Table 3

Methods of expert surveys

Poll method	Method Essence
Method of average assessment according to individual assessments of experts	Experts express their individual opinion on the possible value of the market volume in the period under study. Based on the assessments of all experts, the final assessment of the market capacity is calculated as a simple arithmetic average of individual assessments of experts
Method of pessimistic, optimistic and most probable opinions	Experts express pessimistic, optimistic and most probable opinions regarding the size of the market capacity. Each opinion is assigned a weighting coefficient that characterizes the probability of a situation occurring in which the actual market volume will correspond to the expert assessment. For each expert, the final score is determined as the arithmetic mean of the weighted optimistic, pessimistic and most probable estimates, taking into account their weighting coefficients. The simple arithmetic mean of the final estimates of experts characterizes the market volume
Commission Method	A group of specialists of the organization, industry experts makes an agreed decision regarding the possible value of the market volume
Delphi method	Reusable individual surveys of experts. The scores obtained from the first survey are provided to each expert so that he refines his individual assessment, taking into account the opinions of other experts. Opinion refinement procedures are carried out until the spread of opinions of all experts corresponds to a predetermined value of their dispersion. Final Score is the average of individual expert opinions

Expenditure method (standard consumption method).

This method consists in summing up the norms for the consumption of a product, multiplied by the number of consumers.

For example, it is known that every resident of Ukraine drinks 10 liters of beer a year (data from the statistical office). Ukraine has 48 million people.

The capacity of the Ukrainian beer market in physical terms = 48 million x 10 liters = 480 million liters.

Provided that the average cost of a liter of beer = 1.5 hryvnia, then the capacity of the Ukrainian beer market in monetary terms = 480 million x 1.5 hryvnia = 720 million hryvnia.

This method can be based on how much money the consumer can spend to purchase the proposed product. First, the total income of the inhabitants of the study region is calculated. The result is then adjusted for the non-saving share of the population's income, then for the share of the population's expenditures corresponding to the project of the commodity group or subgroup. Data for these calculations can be found on the websites of the State Statistics Committee and the Central Bank of Russia.

The market capacity calculated in this way usually turns out to be overestimated, so this method can be called optimistic.

income method.

Here, the annual turnover of one of the market players working with similar products is taken as the basis for calculations. Some of them publish the results of their work in the press, even indicating the share of the market they occupy. To find data on the size of the local market, the result must be corrected by determining the share of enterprises of this type in the total sales of the selected group of goods. The data obtained in this way on the volume of the regional market can be used for developments in another region, but at the same time it is necessary to take into account the data of the State Statistics Committee on the ratio of the purchasing power of the regions. This method gives a pessimistic estimate.

Extrapolation.

Data from previous years are extrapolated taking into account past growth rates.

Direct Accounting Methods

Press monitoring.

In the case of an industrial market, when there are few sellers, few buyers, and each purchase costs big money, the market size can be calculated by directly summing 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 carefully following the emerging information, by monitoring the press, competitive and thematic Internet sites, one can collect very accurate information about all projects in this industry for the reporting period.

Statistical and accounting data.

Exclusive

Often, a company has access to specific data, which can be used to accurately determine the size of the market.
Let's go back to the POS example. It is known that a special stamp must be pasted on all cash terminals during the sale, certifying that this type of cash terminal is allowed for operation by the State Tax Inspectorate. It is also known that the right to manufacture and sell such stamps belongs to only one organization.

If we manage to find out from this organization how many stamps were sold in a year, then by multiplying the number of stamps by the average cost of a cash terminal, we will get the market volume and our share in it (according to our own sales data).

Another example: the market for electronic document management systems on the platform Lotus Notes/Domino.

All companies selling software on the platform Lotus Notes buy licenses for lotus from IBM (the manufacturer of this platform). Therefore, IBM has data on all sales in a given region. Multiplying the number of Lotus licenses sold by the average software price gives the market size.

public data

If you are selling a product imported from abroad, you can use customs databases.

Some industry associations and statistical agencies collect and publish data on the overall level of sales in their industries.

However, such statistics can be very inaccurate. Majority Russian companies never provides accurate information about the volume of services produced or sold (double-entry bookkeeping, left income, etc.) and tries in every possible way to get around existing rules(no matter what it concerns - customs, accounting or something else). Therefore, in Russia it is hardly possible to claim that you have accurate information about the market or about any company (unless it is a market where there are only a very limited number of sellers or a limited number of buyers).

So, there are many methods for determining the size of the market. And their number, of course, exceeds that described in this article. It should be noted that in Russian practice, companies pay much more attention to promoting finished products rather than studies that require high-quality input data. Serious quantitative research takes a lot of time and money and is not justified for every company. Therefore, marketers often evaluate the market "offhand" using expert opinions. However, with the development information technologies and the spread of CRM systems for quantitative research, there are more and more opportunities.

LITERATURE

1. Materials of the training course for the retraining program in marketing // State University management "RIMA", 2002.
2. Kotler F. Marketing Management Millennium. 10th ed. - SPb., M., Kharkov, Minsk: - Publishing house "Piter", 2000.
3. Avdeev V.Yu. Application sampling methods in audit. http://www.audit-it.ru/viborka.php?foprint=1.
4. Haig P., Haig N., Morgan K. Marketing research in practice: Basic methods of market research. — Balance Business Books, 2005.
5. Anurin V., Muromkina I., Evtushenko E. Marketing research of the consumer market: Unique domestic experience / Tutorial. - St. Petersburg: Publishing house "Peter Print", 2004.
6. Site materials http://marketing.spb.ru.

Also on this topic.

Michael R. Lewis is a former corporate executive, entrepreneur, and investment advisor based in Texas. He has worked in business and finance for over 40 years.

Number of sources used in this article: . You will find a list of them at the bottom of the page.

Analysts have created dozens of ways to evaluate the performance of a company (and new ones are constantly emerging), so very often specialists forget about some of the traditional tools for evaluating a company's performance. Market share is one of these indicators and, knowing the methods of its calculation, you can determine the effectiveness of the company and predict its prospects.

Steps

Part 1

Market Share Calculation

Determine the period for which you plan to calculate the 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 income (revenue) of the company. This can be done based on data from quarterly or annual financial statements. public company. Such reporting includes information about the company's total income, as well as a breakdown of income for specific goods and services sold by the company.

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

1. Find the total sales in the market in question. These are the total sales in the market in question.

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

   Determine 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 in the high price category, so less than 10% of car buyers are its customers (luxury car sales are a small fraction of the total of 12.7 million cars sold per year). BMW sold 247,907 vehicles in 2011, more than any other luxury car manufacturer.

   • Clearly define the specific market segment you intend to explore. This could be a general market, so target total sales, or a specific market segment limited to specific products and services (in which case, compare values ​​for a specific product/service for each company in the market).

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

Part 3

Advantages and disadvantages of market share

Find out what information market share can provide. Market share is not the value by which you will receive comprehensive information about the analyzed company. This value has advantages and disadvantages.

Be mindful of limits. As noted above, market share also has its drawbacks.

1. Think about how market share affects investment strategy.

   • Do not invest in companies that do not increase market share for several years in a row.
   • Investors are advised to pay attention to firms with a growing market share. If such companies are well managed and profitable (this can be found in the financial statements of companies), then the value of such companies is likely to increase.
   • A firm with a shrinking market share may not be doing very well. But this is not the only factor to consider in order to determine whether or not to invest in such a company. Also look at profit margins and product mix (whether expanding or not).

Market share is a traditional tool with which you can evaluate the performance of any enterprise, as well as predict further development prospects. This indicator shows what place the company occupies in the relevant market segment relative to its competitors.

It is worth noting that a quantitative display of market share can be obtained by calculating the percentage of sales to the total sales of products that belong to the same group.

Market share reflects how effective marketing activities runs the business. It should be noted that at the moment there is no universal method, unanimously adopted in the world economy, that allows to measure this indicator in a perfect way. The company's share can be calculated not only in the market, but also for a separate service segment, that is, that part of the market volume for which many companies are actively competing.

If the total sales in the corresponding market segment cannot be calculated, then share can be determined in relation to parameters such as:

• Sales of nearest competing firms.
• Market segment leader or leading competitor.

What are the ways to calculate market share?

There are several effective ways by which you can correctly determine the share, namely:

in kind

The indicator is the number of commodity units that are sold by a certain enterprise as a percentage of the total market sales, which are expressed in the same units. In this case, you should use the following formula:

Market Share=Percentage Unit Sales/Amount of the same sales made in the market.

In value terms

The indicator in sales volumes differs from the first method by reflecting the cost at which products are sold. In this case, the calculation formula will look like this:

Market share=Sales in currency/Total sales in the market segment.

Through brand consumption intensity

This method also known as the P&C technique. To use the methodology of Parfitt and Collins, it is necessary to use information from panel surveys, which are conducted on the basis of a regular sample of real buyers. It is worth noting that the calculations are carried out as a percentage, and the formula looks like this:

Brand market share= Brand penetration * Repeat purchase trademark* Intensity of brand consumption.

Brand penetration is the percentage of consumers who purchase a brand at least once out of all consumers who make a purchase of the product to which the company belongs.

Repeat purchase reflects how committed consumers are to a brand. This indicator is calculated as the percentage of brand acquisitions that consumers have purchased more than once during a specified period of time.

Brand consumption intensity refers to the ratio of the average purchases of a company's products by repeat customers to the average consumption of all product groups represented in a particular category.

What are the goals of conducting a market share analysis?

Share analysis is carried out to determine two goals, in particular:

1. The effectiveness of the fight in a competitive environment.
2. Advantages in a competitive environment.

It should be noted that to determine the first goal, a small scale is most often used. market segmentation. In this case, it is necessary to analyze each segment, including territory, group, product category. In turn, to determine competitive advantage segments that are more aggregated should be applied. This will allow you to better understand the competitive capabilities of the company as a whole in the market.

How can you collect information about a particular market?

In order to correctly calculate market share, it is necessary to collect relevant data. It is worth considering that the collection of detailed information on the market segment is quite difficult task. There are a number of sources from which data can be obtained, in particular:

• State statistics.
• Manufacturers Associations.
• Retail retail chains.
• Independent research and analytical agencies.

It is recommended not to dwell on one of them, but rather to collect available information from several sources. Then you should compare it, because only in this way can you correctly assess the state of the market.

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

Market share: structured industries

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

There is a simple rule. It is easiest to win back your share in the least structured branch of business. This means that there are no clear leaders and winners in it, you have prospects for. And all participants have minor shares. You just tune in competently and go ahead.

There are a number of areas in which super champions operate, and 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 participating in the "run". Estimate how many participants and what shares they occupy.

Find out what "races" are happening nearby. You can stay within the current business and find something nearby in an adjacent area, and take a certain share there. Revenue from hitting such a point can grow in arithmetic progression.

And do not participate in "fun starts". No need 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”. It may “shoot”, but the amount of effort spent will be disproportionate to the profit received. Consulting service for agronomists through mobile app- it's definitely interesting idea. But is the game worth the candle?

Market share: for those at the start

Market share: seasonal business - we deliver Christmas trees and disperse

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

Occupy new niches to compensate for the drop in revenue. A share in pyrotechnics is compensated, for example, by a share in the sale of swimming pools.

Shrinking in the off-season, for example, selling Christmas trees under New Year. In December, the staff of the enterprise can 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 a market share can be taken without applying special efforts inside the company. This happens in two cases.

1. You operate in a booming market. Then minimum set movements and activities gives you serious growth and share. And that doesn't mean you're successful. In essence, your company is adrift like a badly steered ship.

A good example of a market that boomed and then plummeted would be the housing construction industry. Until recently, every year it itself grew by 30%. Then there was a collapse due to the financial crisis, and the market shares of its participants began to shrink rapidly.

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

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

The next step is to continue the analysis. It is important to estimate the availability of a niche, average check, trade length, purchase frequency, scalability.

We have shown that sometimes all the efforts to win 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 market preliminary evaluation algorithm. Before you start putting in the effort, make sure you're not reinventing the wheel and heading in the clouds.

Market volume. Please calculate for me what is the market capacity and what market share we occupy, such requests are often heard from company executives. For an experienced marketer, it will not be difficult to make such a calculation, therefore this article is devoted to young professionals, novice marketers.

First we need to understand the size of the market

Market capacity \u003d 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 (number / year) * 100) and divide by market capacity (here it is clear, we take sales volume from our database)

Now from practice.

• Change in market conditions
• The shadow sector, which may exceed the official data at times.
• Errors in the methodology for collecting information.
• There are errors in data collection

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

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

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

In the event that management begins to mumble, find an alternative that will really help in making a decision. Since the market share indicator cannot be precisely calculated, you cannot draw any special conclusions. And besides, to work with the 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. AT modern marketing it is necessary to work not for the share of the market, but for the share of customers. Select for yourself large clients who are already yours and with whom you can work. Determine their purchasing potential and calculate the share of these indicators. This will really help you increase your profits, and you can calculate the market share once a year and compare it with last year's figures and not for making a decision, but for the sake of curiosity. Good luck with your marketing!