This presentation serves as the introduction as well as Part 2A (Market Shar) for the Marketing Metrics Training Series by a company called Marketing Matters. Marketing Matters is a marketing strategy consultancy based in KwaZulu Natal, South Africa. The training series is based on the book, "Marketing Metrics: 50+ Metrics Every Executive Should Master" by Farris, PW et al. You can contact us on (+2731) 764 3919 or visit our website - www.marketingmatters.co.za - for more contact details.

2. Marketing Metrics
Chapter 1:Introduction
Chapter 2: Market Share

3. Marketing Metrics
Chapter 2: Share of Hearts, Minds and Markets

4. Chapter 2
What is market share?
At first it appears to involve a simple calculation of us /
(us+them).
However: raises host of questions such as “Who are they?”
and “Which units will be used?”.
Marketer’s rely on numerous different indicators of future
changes in market share.

5. Chapter 2
We will look at the following indicators:
PART 1:
2.1. Market Share
2.2. Relative Market Share and Market Concentration
2.3. Brand Development Index and Category Development
Index
2.4. Penetration

6. Introductory Chapter
Chapter 2
2.1. Market Share – Definitions
Market Share: The percentage of a market accounted for
by a specific entity.
Unit Market Share: Units sold by a particular company as a
percentage of total market sales, measured in the same
units.
Revenue Market Share: It reflects the price at which goods
are sold.

7. Introductory Chapter
Chapter 2
2.1. Market Share
PURPOSE: Market share is an indicator of how well a firm is
doing against its competitors.
The percentage of a market (defined in terms of either units
or revenue) accounted for by a specific entity.
Marketers must translate sales targets into market share as
this will demonstrate whether forecasts are to be obtained
by growing with the market or capturing share from
competitors.

8. Introductory Chapter
Chapter 2
2.1. Market Share – Calculations
Unit Market Share (%) = Unit Sales / Total Market Unit Sales
Revenue Market Share (%) = Sales Revenue / Total Market
Revenue

9. Introductory Chapter
Chapter 2
2.1. Market Share – Data Sources, Complications and
Cautions
Market definition is never a trivial exercise.
Data parameters must be carefully defined.
The time period measure will affect the signal-to-noise ratio.
There is a threat of potential bias in reported shares.

10. Introductory Chapter
Chapter 2
2.1. Market Share – Related Metrics and Concepts
Served Market: The portion of the total market for which the
firm competes. May exclude geographic regions or product
types.

11. Introductory Chapter
Chapter 2
2.2. Relative Market Share and Market Concentration
PURPOSE: To assess a firm’s or a brand’s success and its
position in the market.
Relative Market Share: Index of a firm’s or a brand’s market
share against that of its leading competitor.
Market Concentration: Measures the degree to which a
comparatively small number of firms accounts for a large
proportion of the market.

12. Introductory Chapter
Chapter 2
2.2. Relative Market Share and Market Concentration –
Calculation
Relative Market Share (I) (%) = Brand’s Market Share /
Largest Competitor’s Market Share
EXAMPLE
A-One sells 7, 500 cars while Zipper sells 25, 000. Therefore A-
One’s relative market share is 7500/25000 = 0.3 (revenue).

13. Introductory Chapter
Chapter 2
2.2. Relative Market Share and Market Concentration –
Related Metrics and Concepts
Market Concentration: The degree to which a relatively small number
of firms amounts for a large proportion of the market (Concentration
Ratio).
Three (Four) Firm Concentration Ratio: The total (sum) of the market
shares held by the leading three (four) competitors in the market.
Herfindahl Index: A market concentration metric derived by adding the
squares of the individual market shares of all the players in a market.

14. Introductory Chapter
Chapter 2
2.3. Brand Development Index and Category Development
Index
PURPOSE: To understand the relative performance of a brand or
category within specified customer groups.
BDI quantifies how well a brand is performing within a specific group
of customers, compared with its average performance among all
consumers.
CDI measures the sale performance of a category of goods or
services within a specific group, compared with its average
performance amongst all consumers.

15. Introductory Chapter
Chapter 2
2.2. Relative Market Share and Market Concentration – Data Sources,
Complications and Cautions
It is vital to use comparable figures in order to develop meaningful results.
2.2. Relative Market Share and Market Concentration – Related Metrics
and Concepts
Market Share Rank: The ordinal position of a brand in its market, when
competitors are arranged by size, with 1 being the largest.
Share of Category: This metric is derived in the same manner as market
share but it is used to denote a share of market within a certain retailer or
class of retailers.

16. Introductory Chapter
Chapter 2
2.3. Brand Development Index and Category Development
Index – Calculations
Brand Development Index (I) = Brand Sales to Group or
Households in Group / Total Brand Sales or Total Household
Category Development Index (I) = Category Sales to Group
or Households in Group / Total Category Sales or Total
Household

17. Introductory Chapter
Chapter 2
2.3. Brand Development Index and Category Development Index – Data
Sources and Complications
Segments are often bounded geographically.
2.3. Brand Development Index and Category Development Index –
Related Metrics and Concepts
CDI has also been applied to retail organizations and this measures the
extent to which a retailer emphasizes one category versus others.
Category Development Index (I) = Retailer’s Share of Category Sales (%) /
Retailer’s Total Share of Market (%)

18. Introductory Chapter
Chapter 2
2.4. Penetration
The measure of brand or category’s popularity.
It is defined as the number of people who buy a specific brand
or category of goods at least once in a given period, divided by
the size of the relevant market population.

19. Introductory Chapter
Chapter 2
2.4. Penetration – Calculations
Market Penetration (%) = Customers who have Purchased the Product
in the Category / Total Population
Brand Penetration (%) = Customers who have Purchased the Brand /
Total Population
*Penetration Share (%)* = Brand Penetration (%) / Market Penetration
(%)
*Penetration Share (%)* = Customers who have Purchased the Brand /
Customers who have Purchased a Product in the Category

20. Introductory Chapter
Chapter 2
2.4. Penetration – Calculations
EXAMPLE (Brand Penetration)
Over 1 month: in a market of 10,000 households, 500
households bought the new Big Bomb brand
Brand Penetration: 500 / 10 000 = 5%

21. Introductory Chapter
Chapter 2
2.4. Penetration – Decomposing Market Share
Relationship between Penetration Share to Market Share
Share of Requirements (see 2.5.)
Heavy Usage Index (see 2.6.)
2.4. Penetration – Data Sources, Complications and Cautions
The time period over which a firm measures penetration can have a
significant impact on the penetration rate.

22. Introductory Chapter
Chapter 2
2.4. Penetration – Related Metrics and Concepts
Total Number of Active Customers: The customers
(accounts) who purchased at least once in a given time period.
Acceptors: Customers who are disposed to accept a given
product and its benefits – the opposite of rejecters.
Ever-tried: The percentage of a population that has tried a
given brand at any time.

23. Introductory Chapter
Chapter 2
END OF PART 1
PART 2 will include:
2.5. Share of Requirements
2.6. Heavy Usage Index
2.7. Awareness, Attitudes and Usage (AAU): Metrics of the Hierarchy of
Effects.
2.8. Customer Satisfaction and Willingness to Recommend
2.9. Willingness to Search