Analysing the Market
Market share
Aims:
• To understand the nature and type of
markets
• To understand the meaning of market
share
• To be able to calculate market size,
growth and share.
What is a market?
• Market – any place
or process that
brings together
buyers and sellers
with a view to
agreeing a price
Defining a market
A market is
anywhere where
buyers and
sellers come
together to
transact with
each other
Local
markets
National
markets
Physical
markets
Electronic
markets
Local Markets
• Where customers are
a short distance from
suppliers
• Common for the sale
of fresh and locallysourced products and
the delivery of locallysupplied services
National Markets
• The same product or service is
offered to customers who are
spread around the country
• A business may have several (or
many) locations in the country
in order to reach those
customers
• A start-up or small business can
be focused on a national
market, although it is likely that it
will have a very small share of
the market
Physical markets
• A physical market brings
buyers and sellers
together in the same
location
• Prices are often
negotiated by customers
• Examples:
–
–
–
–
Farmers market
Car boot sale
High street retail
Auction houses
Electronic markets
• Transactions are completed
electronically with the
delivery method depending
on the nature of the product
sold
• Examples:
– E-commerce
– Online auctions
An Invisible Market?
Markets can exist:
• over telephone lines
• online
• in emails
As long as what happens involves
buyers and sellers in a business
transaction
B2B & B2C
Business 2 Business
Business 2 Consumers
You need a set of mini case
studies
• In small groups
• Sort out the business case studies into 3
groups
• B2B
Answers on following
• B2C
slide…
• B2B & B2C
Different types of market focus
B2B only
B2C only
Both….
Answers….
B2B only
Premier water
coolers (1)
Beautiful Vending
(3)
Rock & Ruby (7)
Events Northern (15)
B2C only
Sports Stars (2)
Jo Jingles (4)
Fly Fishing (8)
Daisy Coffins (10)
Curries made
Simple(12)
Innovations (13)
Pet Pavilion (16)
Tea on the Green
(20)
Both….
Mozzo (5)
ChemDry (6)
Artichoke Ltd (9)
Fivez (11)
Little Ironies (14)
Tutor2U (17)
Lynches Direct (18)
Links Putt (19)
Analysing the market
There are three key calculations you need to be able
to complete in order to analyse market data in BUSS1
• Market size (volume and value
measures)
• Market growth (percentage growth)
• Market share (percentage of the
market owned by each competitor)
Market Size
Need to have calculators!
Market size
• Market size measures the sales by all
companies within the market place.
• It can be measured in 2 ways:
» By volume (quantity sold
e.g tonnes or units)
» By sales (value of sales
e.g price x quantity sold)
Market size
• What measure could be used to show the
volume of the following market places:
•
•
•
•
•
•
•
Cars?
Yogurt?
Daffodils?
Hair cuts?
Footballers?
Bank service?
Schools e.g Ashcombe market size?
Example
Car Valeting Market
Sales (£)
Cleanstyle
£65,000
WorcesterValet
£45,000
AutoFresh
£30,000
Others
£110,000
Total
£250,000
The total value of sales (market
size) can be found by adding
up the sales of each company
Market size by value
• Soft drink = £2,481,544,000
trend = + 4.9%
• Crisps = £1,836,016,000
trend = +2.1%
• Hot drinks = £1,049,619,000
trend = -4%
What
does the
trend
mean?
Trends
• It tells us whether the market is growing
or declining.
• It tells companies that there are
possible opportunities to increase their
market share……… using marketing!
A few quick calculations for
you to do!
Do volume and value change in
the same direction?
• If you sell 5m units pa
and the average price
is £4, what is the value
of the sales?
• £20m
• If you sell 6m units pa
and the average price
is £3, what is the value
of the sales?
• £18m
• If you sell 6m units pa
and the average price
is £4, what is the value
of the sales?
• £24m
• The value has fallen
compared to previous
figures
What effect of a trend?
• If a market value is
£10,000 and the
trend is +2%. What
will be the market
size next year?
• If a market value is
£10,000 and the
trend is -2%. What
will be the market
size next year?
• 10,000 x 0.02 = 200
• 10,000 x 0.02 = 200
• So next year value
will be £10,200
• So next year value
will be £9,800
Market Growth
Market Growth calculations
• If a market is worth £20m and next
year it increases to £22m, it has grown
in size
• But by how much?
• 22-20 = 2 / 20 x 100 = 10%
Formula
• Market Growth = change in size x 100
Original market size
A few quick calculations for
you to do!
Market Growth
• Market was £40m
now is £60… market
growth is…?
• 50%
• Market was £40m
now is £30… market
growth is…?
• - 25%
• Market is worth £2m
and its expected to
grow by 20%. What
will the size of the
market be next
year?
• £2.4m
Market share
Example
Car Valeting Market
Sales (£)
Share (%)
Cleanstyle
£65,000
26%
WorcesterValet
£45,000
18%
AutoFresh
£30,000
12%
Others
£110,000
44%
Total
£250,000
100%
The total value of sales (market
size) can be found by adding
up the sales of each company
Market share is calculated by
taking the sales of one
company and dividing by the
market size
Market Share
• Market share =
Sales of the business
Total sales in the market
X 100 = %
Does size matter?
• It is used to work out how big each
company is… what’s its market share?
• Market share can tell us if the
company is a market leader,
monopoly or a niche business.
• It can also tell us if the market is
growing or declining.
Your go…
Interpreting market share
Leading
brand
Sales of
leading
brand
Market size
(value)
Walkers
crisp
£447m
£1,702m
Nescafe
£226m
£535m
Kitkat
£163m
£3,354m
Fill in the gaps
Market
share
Felix cat
food
£541m
19.6%
Walls
Magnum
£709m
6.3%
Interpreting market share
Leading
brand
Sales of
leading
brand
Market size
(value)
Market
share
Walkers
crisp
£447m
£1,702m
26.3%
Nescafe
£226m
£535m
42.2%
Kitkat
£163m
£3,354m
4.9%
Felix cat
food
£106m
£541m
19.6%
Walls
Magnum
£45m
£709m
6.3%
Now for something harder
• Felix has 106m sales
and 19.6%
• How do you
calculate the
Should get an
market size?
answer close to
£541m
• If Felix has 19.6%
• Then how big is 1%
of £106m sales?
• 106/19.6 = ?
• Multiply this by 100
to get the answer
Brain strain….
• Kit kat has 7% market share with sales of
£179m…. How big is the market size?
179 / 7 x 100
• Heinz soup has 35.7% market share
and
AND
£133m sales …. How big is the market
size?
133 / 35.7 X 100
Walker’s
Marketdominates
Leader or Market
the market with 26.3%
dominator?
share (the nearest
Leading
Sales of has
Market
size Market
Share of
competitor
7.1%)
brand
leading
brand
(value)
share
nearest
competitor
Walkers
crisp
£447m
£1,702m
26.3%
7.1%
Nescafe
£226m
£535m
42.2%
15.3%
Kitkat
£163m
£3,354m
4.9%
3.9%
Felix cat
food
£106m
£541m
19.6%
18.3%
Kitkat leads the market
Walls
£709m
£45m
with
1%
more
share
Magnum
6.3%
5.1%
Homework – follow on from
assessment
• The idea to open up their own coffee shop was met with
overwhelming approval from their friends and family. This
enthusiasm seemed justified when Jan carried out some
market research which confirmed a growing market for
their product/ service. The value of UK coffee shop sales
grew from £6.3 million in 2001 to £34 million in 2006.
• Although there was no competition in the village, the local
town (10 miles away) had a coffee shop in the form of
Costra Nova Coffee. In 2006, Costra’s UK sales were £5m,
making them without doubt the market leader.
1. Define the term, market size (2 marks)
2. Calculate the percentage growth in the UK market for Coffee shops
between 2001 and 2006 (4 marks)
3. Calculate Costra Nova’s market share in 2006 (4 marks)
Plenary
• What are the 2 methods of measuring
market size?
• What is the formula for calculating market
share? Why is important to know a
products market share?
• What is the difference between a market
leader and a market dominator?
Notes on Markets
• What are the FOUR different
market categories.
• How do you calculate
market growth?
• What is B2B and B2C stand
for?
• What is the formula for
calculating market share?
• How do you calculate
market size?
• What is the difference
between a market leader
and a market dominator?