Methods for determining market volume. Market share of the company. Relative market share

One of the main tasks of product market research is to determine its capacity. This indicator demonstrates the fundamental possibility of working in a specific market.

Market capacity- the potential volume of goods sold on it over a certain period of time (usually a year).

Determining market capacity involves assessing the number of consumers and forecasting the average level of consumption. In this case, the calculation of the potential market capacity (V) is generally carried out as follows:

where K is the expected volume of consumption of a given product by one consumer during a certain period;

N is the maximum number of consumers willing to purchase a given product during a certain period.

The estimated volume of consumption is determined both on the basis of actual consumption in previous periods and on the basis of specially developed standards.

Thus, in relation to consumer goods, rational consumption standards, minimum consumer budgets for various categories of the population, subsistence (physiological) minimum standards, etc. are calculated. Calculation of the market capacity for industrial goods is based on industrial consumption standards (use of raw materials, materials, equipment per unit of goods produced).

When assessing market capacity, it is extremely important to take into account the influence of so-called uncontrollable factors. They can be associated with completely unpredictable circumstances: for example, President John Kennedy’s refusal to wear hats (contrary to the traditions of American fashion) at one time had catastrophic consequences for the relevant sectors of production and trade.

Knowing the market capacity and trends in its changes, the enterprise has the opportunity to assess the prospects for its activities in a particular market. There is no point in working in a market whose capacity is insignificant compared to the capabilities of the enterprise: the costs of introducing it to the market and working on it may not pay off. However, it should also be borne in mind that a large market capacity does not always mean the best opportunities for its development.

In such a market there may be strong competition, a high degree of consumer satisfaction with competitors' products; There may be other factors at play that should be taken into account when making decisions about choosing a particular market for subsequent work in it.

Another indicator, market share, has received wider use than market capacity in the practice of marketing research.

Market share- the share of sales of a specific company or brand in the total turnover on the market for a given product or service.

It fairly reliably reflects the results of an enterprise's activities and is usually defined as the ratio of sales volumes - the company and the total in a given market, taken into account in natural or monetary units.

Market share is a metric that needs to be interpreted with great caution. The fact is that its value directly depends on the choice of comparison base, i.e. base market. Thus, the share of the served market (calculated not in relation to the entire potential market, but relative to sales in the markets where the enterprise operates) is always higher than the share of the market as a whole. The relative market share is determined by comparing the company's sales with the sales of competitors. If a firm holds 30% of the market, its three main competitors have market shares of 20, 15 and 10%, respectively, and the rest - 25%, then the relative market share will be 43% (30: 70). If the relative market share is calculated relative to the three main competitors, it will be 67% (30: 45).

Difficulties may arise in determining market share due to the limited availability of necessary data. Thus, calculating the share of the market served implies that the enterprise must estimate the total sales volume in each segment, and determining the relative market share requires information about the sales volumes of its main competitors.

Using the indicator discussed above, you can assess the level of competitiveness of an enterprise in terms of the market potential it has mastered (Table 1).

Table 1

Assessing the competitiveness of an enterprise based on market share.

It is obvious that with the growth of market share, the company's position looks increasingly stable. The fact is that it has the greatest impact on the rate of profit. The result of research by the American Marketing Institute and Harvard Business School is the experimental pattern shown in Fig. 3.

Rice. 3. The relationship between the enterprise’s share in the market and the rate of profit it receives.

In the practice of enterprises using the marketing concept, it is considered mandatory to have data on capacity and market share. Otherwise, it will be difficult or even impossible to respond to changes in the market situation.

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Market share

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

Although market share is the most important indicator of a company's marketing performance, there is no generally accepted perfect method for measuring it. The company's share can be calculated both in the market as a whole and within a specific segment served. The serviced segment is part of the total market volume for which competition is being conducted. In a situation where the sales volume in the market as a whole is unknown, the share is determined relative to:

• relative to 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 volume (in unit terms) is the number of units of a product sold by a particular company as a percentage of total sales in the market, expressed in the same units.

Market share by unit = Unit sales (quantity)
sales (%) Unit sales volume across the entire market (quantity)

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

Unit sales = Market share by unit sales (%) * Unit sales volume for the entire market

Market share in value terms (in sales volumes). Market share by volume differs from unit market share in that it reflects the prices at which products are sold. In fact, a relatively simple way to calculate relative price is to divide the market share by volume by the market share by unit sales.

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

Market share through brand consumption intensity is known as the Parfitt and Collins technique (P&C technique). For the calculation, data from panel surveys are used (i.e., research conducted on a permanent sample of consumers).

The following formula is used for calculations (in %):

Brand Market Share = Brand Penetration * Brand Repurchase * Brand Consumption Intensity.

Market penetration of a brand is defined as the percentage of buyers of a given brand (who made a purchase at least once) of the total number of buyers purchasing goods to which this brand belongs over a certain period. Repeated purchase of a brand characterizes consumer commitment 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 this brand at least once. The intensity of brand consumption is calculated as the ratio of the average amount of consumption of a given brand by repeat purchasers to the average amount of consumption by all groups in a given product category.

Market Share Calculation

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 company's total income (revenue). This can be done using data from a public company's quarterly or annual financial statements. Such reporting includes information about the company's total revenue, as well as a breakdown of revenue 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 company's total revenue, but look for a breakdown of it by specific goods and services.

Find the total sales in the market in question. These are the total sales in the market in question.
Information about total sales in a market can be found in various market studies or through trade 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 a specific product or service. If several firms dominate a market (such as the appliance or automobile markets), add up the sales of those firms to calculate total sales in the market in question.

Divide the total revenue of the company you are analyzing by the total sales in the market to find that company's market share.

One of the main indicators used in assessing the competitiveness of companies is market share. This is a simple but objective indicator of a company's performance. It may be that, at first glance, the company is developing just perfectly: profits are growing, the pace of sales is also increasing, the brand is becoming more and more recognizable. But if the market share is small, then the prospects for business development seem quite doubtful. Therefore, when analyzing a company’s marketing efforts, it is always necessary to monitor its market share, as well as the market shares of its closest and/or strongest competitors.

Market Share Formula

Where: D r- market share, %;
Q n– sales volume (sales) of our or another analyzed company. Can be calculated both in physical terms (pieces) and in monetary terms (rubles);
Q total– total sales volume on the market. It can also be expressed both in pieces and in rubles.

Example of calculating market share

There are 3 consumer electronics stores in the city. For the year, sales volumes in store A amounted to 15 million rubles, in store B – 20 million

rub, and in store C - 25 million rubles Let's calculate the market share for store A:

Thus, the market share of store A is 25% .

Scope of application of the market share indicator

Market share measures two extremely important things. Firstly, the dynamics of market share over the years shows the success of the company's development over time. Secondly, calculation and comparison of the market share of the company and other companies offering similar products in a given region shows the competitiveness of this company.

Features of the market share indicator

• Market share can be calculated based on:

1. cost indicators ( volumes of product sales in rubles.);
2. natural indicators ( sales volumes in pcs.);
3. number of clients.

• market share can be calculated both relative to total sales volumes for the market as a whole, and relative to the sales volume of the strongest competitor (competitors).

Galyautdinov R.R.

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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 of competing products. Thus, market share is a calculated indicator, except in cases where 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, sales volume is expressed in monetary units to calculate market share. However, to exclude the influence of prices on this indicator, it is possible, where appropriate, to use natural 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 based on sales data from a representative sample of sales points - wholesale and retail outlets.

Obviously, different retail outlets can be classified according to their location, type, sales volume, etc. The sample should include different types of retail outlets. To form a sample, it is necessary to have a complete database of retail outlets. Only in this case does it become possible to project the obtained data onto the entire market being studied (market segment). Data is collected on the sales volume of the studied products of competing companies.

Trade audits are usually carried out by large research agencies that have extensive resources for collecting and analyzing data and have proven research technology. Such research costs tens and even hundreds of thousands of dollars, so it is mainly large companies, most often global manufacturers of food and consumer goods, who 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 goods under study in stock and ready for sale. As a result of the sensation, we obtain a complete description of the population under study - the number of retail outlets, their classification and distribution.

Next, a sample is taken from the entire retail network and a so-called statistical panel is formed. The panel is those retail outlets where sales of the product under study will be recorded. The panel is divided into subsamples consisting of different types of outlets. You should first agree with the management of the retail outlets about the possibility of an auditor’s presence and collection of information. The auditor works directly at the point of sale and maintains a description of all goods of the category under study, located both on the sales 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 is entered into databases. Sales volumes and market share indicators are calculated for each product brand and for various product groups.

Let be the total sales volumes for each competing product (A, B, C, ..., N) of a certain category in the research outlets included in the sample, presented in monetary units for the selected period of time, and let be the total sales volume of “our” product. Then the market share of product A for a sample of retail 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 category under study, but only the products of the main competitors. In this case, the market share indicator is calculated only for the main competitors. Let us examine the market share of “our” product and two products of our main competitors. Then

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

Sales for a sample of retail stores can be determined from Nielsen's regular trade panel, which provides a snapshot of all retailers in a particular industry. Based on measurements from the trade panel, the Nielsen index is calculated, which determines the sales volume of a product or brand for a certain period of time (usually two months). The Nielsen index characterizes the average sales volume in one sample store over a certain period of time:

(8)

Where V– sales volume for the selected period of time; – inventories at the beginning of the period; P – deliveries; B – return; – end-of-period inventories.

The market share indicator is calculated using the above formulas.

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

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

CR = number of retail traders of the brand Y product X / total number of sellers of the product X (%).

Weighted distribution(BP) is the product market share owned by retail traders selling the U brand for a given product.

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

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

Selection indicator(IV) = VR/PR = average product sales volume X in stores selling the Y brand/average sales volume of products for all retail traders. A VR of 60% and a PR of 20% means that the stores selected are above average in size (there are few of them, but they generate the bulk of sales for this product). The choice indicator in this case is greater than one, namely 60/20 = 3.

Average share in turnover(SD) 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.

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

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

2. Diary consumer panel of regular respondents.

Respondents use a diary (entries + checks and receipts) to record all purchases of the product group under study. The obtained data, based on the above calculated dependencies, is translated by the researcher into market shares. Diary entries are used by many companies in different countries. Typically, such panels are balanced by family size, age of the head of household, family income, and geography. Panelists are selected quarterly and added to the active list once they have submitted a report that meets the research company's standards. Participants are incentivized for participating in the panel. A family can be excluded from the panel upon application or simply by failing to submit 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 recording purchases.

In this case, respondents are given 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 code is appended to the data read by the scanner. Unlike the first method, the scanner panel allows you to estimate sales within various 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. Based on panel surveys, primarily for consumer goods (both frequently consumed, such as food, and durable goods, such as televisions), the market share of products of a particular brand can be calculated using the Parfitt-Collins method according to the formula

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

repeat purchases of a product of this brand. This is the percentage of consumers who become adherents of a given brand; And – brand consumption intensity – the ratio of the volume of consumption of a given brand by customers making repeat purchases (brand adherents) to the average level of consumption of a given product category.

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 groups characterizes the group of consumers who purchased the product for the first time. Repeat purchase, which characterizes secondary demand, for non-durable goods means that the consumer continues to buy a product of this brand, i.e. remains its adherent. For durable goods, secondary demand refers to a return to a given brand of product when a product is replaced or when an additional purchase is made. This method is directly related to consumer research (bottom-up approach).

Let's assume there are 10 buyers and competing products in the market X, Y, Z(Table 3.2).

Table 3.2. Market share calculation

Buyers	Penetration	Repurchase
		XXXX
		XXXX

Brand penetration value X is 40%, repeat acquisition is 66% (8:12). The intensity of brand consumption is calculated as I = 3:1.8 = 1.67, where the number 3 characterizes the ratio of the amount of product X(sum of initial and repeat purchases) to the number of customers who bought this product (12: 4 = 3). The number 1.8, characterizing the average level of consumption of a given product category, is calculated in a similar way for all buyers of all products under study (18:10 = 1.8).

Market share is calculated using formula (1) as DR = 0.4 0.66 1.67 = 44% (check: DR = 8/18, column “Repeat acquisition”).

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

Respondents are asked directly what products they buy, how often and in what quantities.

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

Table 3.3. Structure of the questionnaire

The product of these answers to three questions (O N C) by the number of buyers of each product - P characterizes the sales volume of competing products for the period of time under study.

For quickly consumed products that are purchased systematically, for which there are certain consumption standards (for example, 2 g of toothpaste for one brushing of teeth), it is enough to determine only consumer loyalty to a particular brand and the frequency of brushing teeth based on a survey.

The same applies to calculating the sales volume of category products 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 discussed in the works). To conduct a market share analysis based on paired comparisons, you must:
• 1) make all possible pairs of the products being studied and prepare questionnaires for pairwise comparisons;
• 2) using these questionnaires, conduct a survey of consumers (representatives of the consumer or business market, depending on the object of study). The respondents are asked to compare products of the same type supplied to the market under study in pairs. In this case, the survey questions can be formulated, for example, as follows: “If you had to choose product A or product B when purchasing, which one would you prefer?” Possible answers: “Product A”, “Product B”, “Products are of equal value”;
• 3) based on the data obtained, estimate the market shares of the products of competing companies.

Assuming that steps 1) and 2) have already been completed, we will show how to estimate the market share of each competing product based on the results of paired comparisons.

Let's look at a hypothetical example. Let respondents express their attitude towards five competing brands A, B, C, D, D (Table 3.4).

Table 3.4. Determining market share based on pairwise comparisons

The numbers at the intersection, for example, of the first row A and the second column B (0.61) represent the proportion of cases of preference for brand A over brand B. Obviously, at the intersection of the second row and the first column there should be a number that complements the previous proportion to one (0.39). If the respondent finds it difficult to choose a preferred brand, 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 pairs being evaluated. Dividing the total preferences of each brand by the sum of all preferences characterizes the calculated value of the market share indicator for products of a particular brand.

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

It is carried out through direct processing and analysis of expert judgments, which can be employees of marketing departments of organizations, retail stores, as well as externally hired employees of consulting firms, marketing centers, marketing specialists, etc.

In addition to primary data, in the case when the market share is studied for enlarged product ranges, and the market gravitates towards 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 marketing intelligence data, 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 products produced are sold, it is possible to estimate the volume of production of competitors by multiplying labor productivity by the number of workers.

Knowing the costs of any type of resource (raw materials, electricity, gas, etc.) for the production of a unit of product and the volume of resource purchases 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 product.

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

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 the 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 strive to talk about each one, at least on their own website). Thus, by monitoring the press, competitive and thematic Internet sites, it is possible to collect very accurate information about all projects in this industry for the reporting period.

Often, a company has access to specific data that can be used to accurately determine market size. For example, when sold, all cash register terminals must have a special stamp affixed to them, certifying that this type of cash terminal 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 marks belongs to only one organization. If you can obtain information from this organization about how many stamps were sold per year, then by multiplying the number of stamps by the average cost of a cash register, you can get the market volume and your share of it (according to your own sales data).

When using publicly available data, be aware that it may be highly inaccurate. Most Russian companies do not provide accurate information about the volume of products produced or sold and will try to circumvent existing regulations (whether it concerns customs, accounting or anything else).

Obviously, using different methods to determine market share will give different results. In this case, you must either give preference to the most reliable method, or use the average value of the market share indicator.

Market share is a traditional tool with which you can evaluate the performance of any enterprise, as well as predict future development prospects. This indicator shows what place the company occupies in the corresponding 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 volume to the total sales volumes of products that belong to the same group.

Market share reflects how effective the company's marketing activities are. It should be noted that at the moment there is no universal method unanimously accepted in the world economy that allows us to perfectly measure this indicator. A 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 volume in the relevant market segment cannot be calculated, then the share can be determined relative to such parameters as:

• Sales of nearby competing companies.
• Market segment leader or leading competitor.

What methods are there to calculate market share?

There are several effective ways to correctly determine the share, namely:

In kind

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

Market share=Unit sales as a percentage/Volume of the same sales made in the market.

In value terms

The sales volume indicator 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 volume in currency / Overall sales volumes in the market segment.

Through brand consumption intensity

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

Brand market share= Brand penetration * Brand repeat purchase * Brand consumption intensity.

Brand penetration is the percentage of consumers who have purchased a brand at least once out of all consumers who have purchased the company's products.

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

Brand consumption intensity means the ratio of the average rates of purchase of the company's products by those consumers who make repeated purchases to the average rates of consumption of all groups of products presented in a particular category.

What are the purposes of conducting a market share analysis?

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

1. Effectiveness of struggle in a competitive environment.
2. Advantages in a competitive environment.

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

How can you collect information about a specific market?

To correctly calculate market share, it is necessary to collect relevant data. It is worth considering that collecting detailed information on a market segment is a rather complex task. There are a number of sources from which data can be obtained, in particular:

• Government statisticians.
• Manufacturers' associations.
• Retail trade networks.
• Independent research and analytical agencies.

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

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

Although market share is the most important indicator of a company's marketing performance, there is no generally accepted perfect method for measuring it. The company's share can be calculated both in the market as a whole and within a specific segment served. Served segment - part of the total market volume for which competition is being conducted. In a situation where the sales volume in the market as a whole is unknown, the share is determined relative to:

• relative to 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 volume terms (in unit terms) - the number of units of a product sold by a particular company as a percentage of total sales in the market, expressed in the same units.

Market share by piece = Unit sales (quantity)
sales (%) Unit sales volume across the entire market (quantity)

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

Unit sales = Market share by unit sales (%) * Unit sales volume for the entire market

Market share in value terms (in sales volumes). Market share by volume differs from unit market share in that it reflects the prices at which products are sold. In fact, a relatively simple way to calculate relative price is to divide the market share by volume by the market share by unit sales.

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

Market share through brand consumption intensity known as Parfitt and Collins technique (R&S technique). For the calculation, data from panel surveys are used (i.e., research conducted on a permanent sample of consumers). The following formula is used for calculations (in %):

Brand Market Share = Brand Penetration * Brand Repurchase * Brand Consumption Intensity.

Brand penetration to 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 purchasing goods to which this brand belongs over a certain period. Repeated purchase of a brand characterizes consumer commitment 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 this brand at least once. Brand consumption intensity is calculated as the ratio of the average amount of consumption of a given brand by repeat buyers to the average amount of consumption by all groups in a given product category.

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The article provides complete visual information about how and why market capacity is calculated, and contains theoretical and practical information for independent calculations.

 

A little theory

Unfortunately, not all entrepreneurs are aware that the development of any business requires a careful and targeted strategic approach. Making decisions blindly can lead to significant financial losses, excess production or lost profits, decreased competitiveness and, as an extreme option, the ruin of the company. One of the main tools for making management decisions is knowledge about the structure and conditions of the market, its capacity. Let's give examples.

Let's say you sell goods for 200,000 rubles per month, and together with your competitors - for 800,000 rubles. But you know that the market can consume goods worth 950,000 rubles, how will you behave in this case? Surely, you will begin an aggressive marketing policy towards other players in order to win the remaining market share?

Another example: your sales are 450,000 rubles/month, and together with your competitors, similar products are sold for 600,000 rubles/month. while the market can purchase a similar product for 1,000,000 rubles. What will you do with this information? Of course, expand production.

Or the third situation: your sales are 900,000 rubles/month, together with your competitors you sell for 980,000 rubles/month, and the maximum purchasing power of the market is 1,000,000 rubles/month. What does this state of affairs tell the manager? - the need to invest stable income from sales in the development of a new product or even business.

To summarize: market capacity is the amount of a product that can actually be sold in a clearly defined market in a specific period of time. Capacity may be temporary

• daily (how much bread can one region buy in a day?),
• monthly or quarterly (how many hairdressing services will the city buy per month?),
• annual (how many tons of confectionery products will a particular region eat in a year?).

And on a territorial basis, respectively, local and niche. Also, market capacity can be potential (the most probable here and now), actual (total sales volumes of all operators) and available (that part of the market that your company can conquer).

Now let’s figure out how to get this valuable information and calculate market capacity.

What data is needed to calculate market capacity?

Incoming information	Explanations
market definition and audience size (KA - number of audience)	Here we determine the territory in which the goods are sold, the number of actual or probable consumers and the form of accounting. For example, goods such as bread, cable television, toilet paper, and televisions are purchased not individually, but for the family, so the market is calculated in households. Personal consumption goods - cosmetics, clothing, piece products and items (bottled beer, cakes, toothbrushes, etc.) are calculated per person. Quantitative indicators can be obtained from free statistical sources.
degree of consumption intensity and frequency of purchases (PP - consumption frequency)	The second input figure for analysis is the frequency of purchases of a product in a certain period of time (or, as an alternative, the rate of consumption of a product per person). For example: cable television is paid once a month (monthly purchase), bread - daily, toilet paper - once 2-3 weeks (pack per family), televisions - once every 5-7 years. This kind of information can be obtained based on a consumer survey, generally accepted standards (for example, it is recommended to change a toothbrush every six months) or on an expert assessment.
average bill - average cost of a product in rubles. (SP - average price)	Not only your product is taken as a basis, but also the entire competitive line. You can calculate the average cost yourself by receiving the price lists of all competitors. Customer surveys (at what price do you usually buy this product?) are also very effective.
average volume and type of product (O - volume)	For example, if we are talking about: bread: loaf, loaf or half a loaf; cable TV - number of channels (package volume); toilet paper - roll or package; TVs - diagonal; carbonated drinks - bottle volume, etc. This indicator may not be used in calculations. but it is a kind of criterion for consumption volumes.

Calculation technique

Step 1: calculate the maximum potential capacity

To calculate the total potential market capacity of your product in a certain region, we use the formula:

Total potential market capacity = KA*PP*SC

Let's look at the example of a cable television provider. Input data:

Considered time interval: quarter;

Considered territorial market: city N with a population of 320,000 people;

Number of audience: 106,000 households (if there is no information on the number of households in your region, you can use Russian population statistics, according to which an average of 3 people live in one house).

Consumption frequency: 1 time per month (subscription fee), respectively, 3 purchases per quarter (if your product is purchased less frequently, then the frequency may not be expressed in whole numbers: an annual subscription to a solarium translated into a quarterly period will have a frequency of 0.25).

average price: 180 rubles

Average volume and type of product: Basic package with 120 channels.

Let's calculate: 106,000 consumers *3 purchases per quarter*180 rub. = 57,240,000 rub. - we got the potential market capacity. i.e., such an amount can be earned by all cable television providers, provided that absolutely all apartments and houses in the city are connected. Now it is necessary to bring these figures closer to commercial realities.

Step 2: determine the audience using the product

We continue to look at the example of the capacity of the market for cable television services in a particular city. We determine the target audience of cable TV services (survey, statistics, observations) and bring it to a certain size.

Let's say, based on the results of a survey, you see that 45% of all respondents living in your coverage area (city N with 106,000 households) use or want to use cable television: (106,000/100)*45= 47,700 households - a quantitative indicator of your market in which all your competitors operate.

Step 3: determine the purchase period

In the case of our example, this period is a month (subscription fee). If you have consumer goods or services, then you should again proceed from the results of a survey of city residents or product consumption standards.

For example, the standard for bakery products per person per day is 300 grams, respectively, per month - 9 kg. Bread is usually bought per family, so one household receives an average of 0.7-1 loaves per day (not everyone eats lunch and dinner at home).

If we talk about cosmetics, then this is an individual product. Eg. Day face cream is usually packaged in 30 ml. One-time use is 0.3-0.5 ml. those. A jar of cream will last a woman for 2-3 months.

Step 4: calculate the average purchase price

To do this, you need to make a price and product range of your competitors.

For example:

We bring the price per ml to our reference jar of 30 ml and see that its average market price is 30 * 2.25 = 67.5 rubles.

Step 5: determine the share of competitors

To do this, it is necessary to conduct a serious study of the representation of competitors and their sales volumes. If we are collecting information for everyday goods, it will be enough to conduct an inventory of competitors' sales points in the city. If these are services, calculate the average flow of clients (observation, survey, purchasing data from employees, control visit). Based on practice, we can say that the simplest and most effective method of obtaining information is guerrilla marketing, or, more simply, questioning competitors’ employees.

For example, a cosmetics manufacturer may instruct its supervisors to measure the availability of competitors' products on shelves or request this information from stores. In the case of cable television, a follow-up call would work well: introduce yourself as a subscriber and ask directly how many people use the services of the provider.

Of course, the numbers will be very approximate, but this is not a problem, i.e. Marker values ​​are needed for calculation.

Step 6: calculate market capacity

To make the description clear, let's return to our cable TV. We have potential capacity, we calculated it by multiplying all households in the provider’s coverage area by the average cost of the package, and we received 57,240,000 rubles or 106,000 subscribers.

Let us remember that this is the absolute maximum of the market, beyond which it will not be able to develop under current conditions. Now let's calculate the actual capacity:

(own sales volume + shares of all competitors).

For example:

• the cable TV provider has 14,000 subscribers in its database (47% of the total volume),
• competitor A - 8,000 subscribers (27%),
• competitor B - 7,000 subscribers (23%),
• small networks - 1,000 subscribers (3%).

Total 30,000 subscribers* average price 180 rubles = 5,400,000 rubles - monthly market capacity covered.

Now consider the survey data, according to which 47,700 households seek or use cable TV services. 47,700*180 rubles (average price) = 8,586,000 rubles. - This full actual (real) market capacity.

We consider: total actual capacity 47,700 - covered capacity 30,000 = 17,700 subscribers (or 3,186,000 rubles, or 37.1%) - this is the uncovered part for which we must fight.

Step 7: calculate the available market capacity

Here we will need information about the share of each competitor. Consider:

In a realistic forecast of available market share, it is natural to assume. that its distribution will roughly correspond to the same pattern observed among competitors, i.e. the percentage share, plus or minus, will remain, which means that cable television providers can count on:

• your company - 8319 subscribers (47% of the total volume),
• competitor A - 4749 subscribers (27%),
• competitor B - 4071 subscribers (23%),
• small networks - 531 subscribers (3%).

8319*180 rub/month = 1,497,420 rub/month - this is available market share, although you can always strive to conquer 100% of the unreached part.