Lecture Marketing metrics: Chapter 3 - Trần Nhật Minh

9/18/2015

Chapter 3:

Market & Sales Forecast

Contents
• Competitiveness metrics
• Market projection

Competitiveness

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Key metrics
• Market share
◦ Revenue /unit market share
◦ Relative market share
◦ Market concentration

• Penetration
◦ Market penetration
◦ Penetration share

Market share
• Purpose: key indicator of market competiveness
• Market share: The percentage of a market
accounted for by a specific entity

Market share
• 𝑼𝒏𝒊𝒕 𝒎𝒂𝒓𝒌𝒆𝒕 𝒔𝒉𝒂𝒓𝒆 % =

𝑈𝑛𝑖𝑡 𝑠𝑎𝑙𝑒𝑠 #
𝑇𝑜𝑡𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 #

• 𝑹𝒆𝒗𝒆𝒏𝒖𝒆 𝒎𝒂𝒓𝒌𝒆𝒕 𝒔𝒉𝒂𝒓𝒆 % =
𝑆𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 ($)
𝑇𝑜𝑡𝑎𝑙 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠𝑎𝑙𝑒𝑠 𝑟𝑒𝑣𝑒𝑛𝑢𝑒 ($)

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Market share
• Cautions:
◦ Unit vs. revenue
◦ Manufacturer’s warehouse vs. sales to consumers.
◦ Before or after promotion

Relative market share
• Purpose: to assess a firm’s or brand success and its
position in the market

• 𝑹𝒆𝒍𝒂𝒕𝒊𝒗𝒆 𝒎𝒂𝒓𝒌𝒆𝒕 𝒔𝒉𝒂𝒓𝒆 % =

𝑏𝑟𝑎𝑛𝑑 ′ 𝑠 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 ($,#)
𝑙𝑎𝑟𝑔𝑒𝑠𝑡 𝑐𝑜𝑚𝑝𝑒𝑡𝑖𝑡𝑜𝑟 ′ 𝑠 𝑚𝑎𝑟𝑘𝑒𝑡 𝑠ℎ𝑎𝑟𝑒 ($,#)

Market concentration
• The degree to which a relative small number of
firms accounts for a large proportion of the
market.
• Also known as the concentration ratio.
• Usually calculated for the largest 3 or 4 firms in the
market.

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Penetration
• Purpose: measure of brand or category popularity.
• Helping managers to decide strategy to increase
sales by:
◦ Acquiring existing category users from competitors
◦ Expanding the total population of category users

Penetration
• 𝑴𝒂𝒓𝒌𝒆𝒕 𝒑𝒆𝒏𝒆𝒕𝒓𝒂𝒕𝒊𝒐𝒏 % =

• 𝑩𝒓𝒂𝒏𝒅 𝒑𝒆𝒏𝒆𝒕𝒓𝒂𝒕𝒊𝒐𝒏 % =

• 𝑷𝒆𝒏𝒆𝒕𝒓𝒂𝒕𝒊𝒐𝒏 𝒔𝒉𝒂𝒓𝒆 % =

𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 𝑤ℎ𝑜 ℎ𝑎𝑣𝑒 𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑
𝑎 𝑝𝑟𝑜𝑑𝑢𝑐𝑡 𝑖𝑛 𝑡ℎ𝑒 𝑐𝑎𝑡𝑒𝑔𝑜𝑟𝑦 ()

𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 (#)

𝐶𝑢𝑠𝑡𝑜𝑚𝑒𝑟𝑠 𝑤ℎ𝑜 ℎ𝑎𝑣𝑒
𝑝𝑢𝑟𝑐ℎ𝑎𝑠𝑒𝑑 𝑡ℎ𝑒 𝑏𝑟𝑎𝑛𝑑 ()
𝑇𝑜𝑡𝑎𝑙 𝑝𝑜𝑝𝑢𝑙𝑎𝑡𝑖𝑜𝑛 (#)

𝐵𝑟𝑎𝑛𝑑 𝑝𝑒𝑛𝑒𝑡𝑟𝑎𝑡𝑖𝑜𝑛 (%)
𝑀𝑎𝑟𝑘𝑒𝑡 𝑝𝑒𝑛𝑒𝑡𝑟𝑎𝑡𝑖𝑜𝑛 (%)

Penetration
• Cautions:
◦ Category  time period

• Data sources:
◦ Internal sources:
◦ Sales report
◦ External sources:
◦ Competitor study
◦ Commercial data
◦ Consumer survey

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Market projection

Key metrics
• Volume projection

• Break-even sales

Volume projection
• Purpose: to ensure that marketing and sales
objectives mesh with profit targets
• Target volume: the volume of sales necessary to
generate the profits specified in a company’s plans.

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Volume projection
• 𝑻𝒂𝒓𝒈𝒆𝒕 𝒗𝒐𝒍𝒖𝒎𝒆 # =

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 $ +𝑇𝑎𝑟𝑔𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡𝑠($)
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡($)

• 𝑻𝒂𝒓𝒈𝒆𝒕 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 $ = 𝑇𝑎𝑟𝑔𝑒𝑡 𝑣𝑜𝑙𝑢𝑚𝑒 # ∗
𝑆𝑒𝑙𝑙𝑖𝑛𝑔 𝑝𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡 $
• 𝑻𝒂𝒓𝒈𝒆𝒕 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 $ =

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡 $ +𝑇𝑎𝑟𝑔𝑒𝑡 𝑝𝑟𝑜𝑓𝑖𝑡𝑠($)
𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛(%)

Break-even sales
• Purpose: to provide a rough indicator of the earnings
impact of a marketing activity.
• Break-even occurs when the total contribution equals

the fixed costs, profits and losses at this point equal
zero.
• Break-even volume: the number of units that must be
sold to cover fixed costs.
• Break-even revenue: the level of sales required to
break even.

Break-even sales
𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠 $

• 𝑩𝒓𝒆𝒂𝒌 − 𝒆𝒗𝒆𝒏 𝒗𝒐𝒍𝒖𝒎𝒆 # = 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡

$

𝐹𝑖𝑥𝑒𝑑 𝑐𝑜𝑠𝑡𝑠 $

• 𝑩𝒓𝒆𝒂𝒌 − 𝒆𝒗𝒆𝒏 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 $ = 𝐶𝑜𝑛𝑡𝑟𝑖𝑏𝑢𝑡𝑖𝑜𝑛 𝑚𝑎𝑟𝑔𝑖𝑛

%

• 𝑩𝒓𝒆𝒂𝒌 − 𝒆𝒗𝒆𝒏 𝒓𝒆𝒗𝒆𝒏𝒖𝒆 $ = 𝐵𝑟𝑒𝑎𝑘 −
𝑒𝑣𝑒𝑛 𝑣𝑜𝑙𝑢𝑚𝑒 # ∗ 𝑃𝑟𝑖𝑐𝑒 𝑝𝑒𝑟 𝑢𝑛𝑖𝑡($)

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