Market Analysis

Contents
Market

size
Market share
Market share
Market growth
Competitor analysis
Market segmentation
Market research
Sampling methods

Key terms
Market

size the total number of sales in

(value) or quantity (volume) in a market
Market share the % of a market an
individual business has
Market growth the % increase in the size of
the market on an annual basis
Market segment a section of consumers in
the market which share similar characteristics

Market analysis
Businesses

use methods of market analysis

to find out what is happening in the market
These tools allow them to develop marketing
strategies which exploit opportunities

Market size
This

helps businesses decide the potential

profitability in a market
Larger markets tend to have more
opportunities to make a profit
When a business is considering entering a
new market they will be interested in market
size and the fierceness of competition

Market share
Market share figures allow a business to
compare themselves to their competitors
If the market is dominated by a number of large
companies e.g., Supermarkets such as tesco,
asda, Sainsbury's it is less attractive for new
firms to aim at the entire market
The distribution of market share in a market is
influenced by the type of market that the
business is operating in (monopoly perfect
competition)

Market growth
This

figure is crucial for a business

Many attractive markets are relatively small
and fast growing therefore offering the
potential of high profits
Markets that are growing at a rapid rate tend
to attract lots of new businesses
Markets tend to grow the fastest at the
beginning of the product life cycle

Market growth / decline

Sometimes

markets suffer negative growth

This often leads to companies leaving the
market
Some businesses may be able to exploit
opportunities and segments using their own
USPs when the market is entering into
decline

Competitor Analysis
Businesses

need to have a good idea about

their competitors to enable them to develop
valid and successful marketing strategies
Alongside market share a business often
benchmarks their current / potential
competitors in order to gain a greater
understanding of their offering

Market Share
journal

Market share
Market

share is the portion or percentage of

sales of a particular product or service in a
given region that are controlled by a
company.

example, there are 100 widgets sold in a country

and company A sells 43 of them, then company A
has a 43% market share

Market Share
Or

you sold widgets for a total cost of $860

and the people in the country spend a total of
$2,000 on the same widgets, then the market
share is $860/$2,000 or 43%

The two different methods of calculating market

share won't always provide the same answer,

Market Share
Market

share is used by businesses to

determine their competitive strength in a
sector as compared to other companies in
the same sector

Method 1 Number of Buyers

Estimate

the total number of buyers in your

market and determine how successful your
competition is
Per month, estimate the number of people
that will buy your product or service

This is your percentage

Method 1 Number of Buyers

Ex/ Organic Coffee House
Number of Tim Hortons 3040
Market Share = 76% of Coffee and Baked
Goods
Tims Sells 3 million cups a day

3,000,000/ 3,040 = 987 cups sold per day per store

987* 30 days = 29,605 per month
29,605 / .76 = 38,954 cups a month for a store to have
100% market share in their area

Method 1 Number of Buyers

Our

Organic Coffee House should get 2% of

the market, based off of the following data
(trends that support your business) 2% of
total market share or 779 cups sold a day

38,954 * 0.02 = 779 cups sold a day

Method 2 Percent of Sales

Total Market Share of top 5 competitors and

average last five years of sales

Ex/ Organic Coffee House

Top Five Competitors

Tim Hortons 76% - Sales $14 billion

Starbucks 7% - Sales $1.3 billion
Timothys Coffees World Inc 4% - Sales $736 million
Second Cup 2% - Sales $386 million
William's 1.5% - Sales $276 million

Method 2 Percent of Sales

I

think we can have a market share of 0.05%

based on the following data (trends)

Market share of 0.05% = $ 9.2 million sales