2010 Q3-4 Market Share Analysis
Market shares can be one of the most difficult areas to assess. Many companies want to know where their products or services rank in terms of overall revenue or units relative to competitors. As a market leader a company can be influential in dictating pricing strategy, leading the industry in change or innovation, etc. If a company’s market share is a close second or third, there are opportunities to gain share by creating a better positioning and differentiation strategy. If a company’s market share is a distant fifth or beyond, the strategy may be to try something drastic in order to create a better presence in the marketplace. Some market leaders may play it more conservatively than the laggards since they are interested in maintaining / protecting share while laggards may be willing to take more risk to gain share.
For business to business sales, most companies must rely on calculating their own market shares since the information is not readily reported as it is for consumer products, e.g. food products purchased in grocery stores. Market share analysis usually begins with a market survey of purchasers of a particular product. The market survey requires responses from a representative sample of purchasers in order to provide accurate analysis. Asking which products they purchase on an annual basis or what makes up their current inventory is a good way of acquiring the data for the analysis. Other information acquired through a market survey that is useful for strategy formulation are identifying shifts in purchasing behavior (and the reasons) from one supplier’s products to another.