= 4__: University of

@Southamptcn

MEASURING MARKETING
' EFFECTIVENESS

LECTURE 4: STRATEGIC METRICS: MARKET

SHARE ANALYSIS (TOPIC 2)
CHAPTER 2
Dr. Ying Feng
 University of

Linking to Course Content @Southampton

Rust et al. 2004

*Net profit, Margins, ROMI Astlons The Firm

Tactical Actions Strategies

»| Adverising, ¢ Promotion strategy, "
senice improvements, etc. product strategy,
chamel strategy, elc
*Market Share

Y Y
Customer Impact Marketing Assets
— - i Impact on attitudes, " Brand equity,
*Mindset —~—_ [
Himpacton satisfaction, etc. customner equity, etc.
*Brand Equity T —
«Customer Value T~ T
= 2 — v
Market Impact Market Position
Markat share impact, [~"| Market shara,
salos impact, otc. salos, otc.
*Product Innovation
*Place: Retail and
Distribution v v
*Price/Promotions: Sales
Promotions and. Financial Impact |31 Financial Position
Advertising ROA, EVA, etc. Profits, cash flow, etc.
*Digital

A4 :
Impact on Firm Value »| Value of the Firm
MVA Markel caplakzation,
Tobin's q
 University of
@Southampton

This Week

1. Market Share Metrics

2. Year on Year Growth
3. Relative Market Share and the Boston Consulting
Group (BCG) Matrix
4. Penetration and Double Jeopardy (DJ)
5. Practice Time!
Market Share Analysis

Bendle et al; p.23 - 44

 . o SUni\ffiityof t

Definition Dsaliapton
Market share is the percentage of the total revenue or sales in a market that a company's
business makes up.

To identify:

‘How the firm is performing in sales? relative to competition?

...and

‘What the firm’s market position? is... 7

Adapted from Bendle et al (2017)

Unlt Market @SUniversitvof
outhampton

Share
Unit Sales ,
Unit Market Share (%)= Unit Sales (N) *100
Total Market Unit Sales (N)

|[unitshar
(milion) e ni are (million)
awing Gum Market
Wrigley 452
Cadbury 224
Nestlé 64
Ferrero UK 32
Big Bear Ltd 42 ] 452
Perfetti van Melle 10 % Wr|g|ey =_
" =42.4%
Own-label 123 1 070
Others 123
1070
Total
Revenue Market B southameton
Share
Revenue

Revenue (£)
Revenue Market Share (%)= *100
Total Market Revenue (£)
_ Revenue Share (£€m)
Wrigley 271
Cadbury 112 Chewing Gum Market
Nestlé 32
Ferrero UK 16
Big Bear Ltd 21

Perfetti van Melle 5 271

Own-label 37 ergley %: - 51 %
Others 37 531
531
Total
What are the notable benefits of being ~ Psauthampton
a
market leader? _
Profit impact of Market Strategies (PIMS)

* Economy of scale — increase production amount by reducing the costs

* Higher bargaining/supplier power
* Brand reputation

Results from PIMS have consistent claimed that:

Market leadership is positively (and significantly) related with higher Profitability

[Implication — being market-leader led is positive goal to have]

 @S Uni\.ltel‘r‘sity of "

But? outhamption
?
Armstrong & Green (2007): Excessive Competitor Orientation

Increased Market Share & Profitability link is weak

e Market share can be increased by higher spending or price reduction

e Market share price wars can reduce category profitability

Market leaders tend to be profitable because they are well run, not because they prioritized strategies that
dominate competitors
Questions...? & southampton

After calculating market share metrics we may have further questions...like...

1. What is the brand and market’s track? (Y-o-Y Growth)

2. What is the “relative” market “position” of different products in our portfolio? (Relative Market
Share)

—Both 1 & 2 can be used with the Boston Consulting Group Matrix if the brand has a portfolio of
products

3. To grow, should we be investing in expanding/stimulating the existing market or attracting

customers from competitors? (Penetration Metrics)

10
Year on Year Growth
Year-on-Year Growth @southampton
University of

What is the brand’s market share track?

Let’s look at some automotive sales data in the United States

Mar-24
Manufacturers Mar-24 Sales Unit Share

General Motors 649,637 17.4%

Ford 580,260 15.5%
Chrysler Group 475,964 12.7%
Toyota 520,997 13.9%
ALL 3,743,742

Note: Y-o-Y is valuable for a range of

12
Yea r'O n_Yea r G rOWth @Sumversity of
|| outhampton

Now compare this data to 2023...

Mar-24 Mar-23
Manufacturers Mar-24 Sales Mar-23 Sales Unit Share Unit Share

GM 649,637 664,963 17.4% 18.0%

Ford 580,260 596,816 15.5% 16.2%
Chrysler Group 475,964 428,352 12.7% 11.6%
Toyota 520,997 529,444 13.9% 14.3%
ALL 3,743,742 3,693,296
Yea r'On'Yea r G rOWth @Sumversity of
||| outhampton

Annual growth is an important indicator (can be months):

"Current Year Value — Previous Year Value « 100

Year-on-Year Growth (%) =
Previous Year Value 2

The question is why?

Manufacturers Mar-24 Sales Mar-23 Sales . .
For this micro &
GM 649,637 664,963 macro strategic
Ford 580,260 596,816 analysis is advisable!
Chrysler Group 475,964 428,352
Toyota 520,997 529,444
ALL 3,742,838 3,693,296

What is the YOY growth for Chrysler? Two minutes calculating time!
Relative Market Share and the
Boston Consulting Group (BCG)
Matrix
 University of
Relative Market Share outhampton

What is our market “position” for different products?

In some categories a 15% Market Share is exceptional —in others it may signify a
large discrepancy with that of the market leader. Making direct comparisons
across categories may be less useful.

Standardizing market share relative to the largest competitor (i.e. the market
leader).

Mar-24 Mar-24
Manufacturers New Car Sales New Truck Sales
(YTD) (YTD)
GM 265,438 384,199
Ford 196,493 383,767
[Chrysler Group 128,876 347,088
[Toyota 285,454 235,453 16

ALL 1,836,885 1,905,953

 Relative Market Share
@southampton
University of

Brand's Market Share (n, £)

Relative Market Share (%)= *100
Largest Competitor's Market Share (n, £)
VEMTEE TS Mar-24 Market Leader (Cars): Toyota
New Car Sales

GM 265,438
Ford 196,493 Chrysler Relative MS:
Chrysler Group 128,876
Toyota 285,454
ALL 1,836,885

VI EE TS Mar-24 Market Leader (Trucks): GM

New Truck Sales
GM 384,199

Foted 383,767 Chrysler Relative MS:

Chrysler Group 347,088
oyota 235,453
ncialive ividi kel dlridre
University of
11 @Southampton
BCG Matrix requires Relative Market Share & Market Growth estimates.
Cars:
e Growth from 2023 B 2024 for (YTD) cars = (1,836,885 - 1,905,953)/(1,905,953)
=-3.6% Relative Market Share
High Low

e Relative Market Share (Chrysler) YTD 2024 (Cars) =128,876 (brands market

Market growth rate

High
share)/ (largest competitor’s market share)265,438
=49%
BCG (Cars) = Dog?

Trucks:
e Growth from 2023 12024 for (YTD) trucks = (1,905,953 —
1,787,365)/(1,787,365)= +6.6%
e Relative Market Share (Chrysler) YTD 2024 (Trucks) = 347,086 (brands market
share)/ (largest competitor’s market share)384,199= 90%

BCG (Trucks) = Star? 8

Penetration and Double Jeopardy
(DJ) Effect
 University of

Brand Penetration @ southampton

.

Should we be investing in expanding the existing market or stealing

customers from competitors?

Customers purchasing brand in period (n)

Brand Penetration (%)=( )*100
Total Population (n)

Customers purchasing within the category in period (n)

Market Penetration (%)=( )*1 00
Total Population (n)

Note:
e Defined as the number of people purchasing at least one product in a pre-determined period
(week, month, year, decade).
e Generally requires survey or scanner panel data.
Brand PenEtration @Sumversityof
outhampton
[
Example:
Market research showed that in a market of 100,000 households owning fridges, a total of
5,000 people purchased “Shiny” cleanser during April. This compares to 25,000 households
purchasing competitor brands in the same period.

Brand Penetration Formula

Custs hasing the hi d

Total Market Population

Example Calculation:
What is the Brand Penetration of “Shiny”? (%) 5,000
Brand Penetration = ( W) x 100
= 5%

What is the Market Penetration of fridge cleanser ? (%)

Market Penetration Formula

Market Penetration (%) — (Customers purchasing within the category ) < 10D
Total Market Population

Example Calculation

30,000
Market Penetration = ( ) x 100 = 30%
100,000
How Important is Penetration, B sumear
Really?
Hypothetical Brand |Annual Brand Penetration Number of theoretical Market Share
purchases per annum

Scenario A 32% 14%

Scenario B 16% 4 14%

Your marketing agency gives you two options to achieve 14% market share for your
new brand:
¢ High penetration rate
e Higher purchase rate

Which would you / most marketers commission?

22
The First Law of
Marketing biande
Double Jeopardy (DJ) - OW@
e Scholars have studied hundreds of categories / markets from fast s (5
moving consumer goods to higher education. 25 I

e A surprising and curious result emerges

e High market share brands tend to have a higher penetration and a higher
purchase frequency.
e Lower market share brands are hit by a “double whammy” — they have lower
penetration and people buy them with less frequency.

23
 University of

Example of the Double Jeopardy Effect @Southampton

Two Competing Beverage Brands (Coca-Cola vs. PepsiCo's Small Brand X)

@ PEPSICO
THINGS MADE* BY THINGS MADE BY

THE (M% COMPANY

Smaller brands, face two disadvantages: =" Certoly

&
Fewer people buy them (low
penetration) Pyele
Those who buy them don’t buy them iy »
often (low purchase frequency)
Sprife

GOLD
PEAK
POWERRADE
Scenario: Two Competing Beverage Brands (Coca-Cola vs. PepsiCo's Small Brand X)

Brand Market Share (%) Brand Penetration (%) Purchase Frequency (Avg. per Buyer)

Coca-Cola 50% 40% 5.0 times per year

Brand X 5% 3% 2.0 times per year

 University of
@Southampton

This Week

1. Market Share Metrics

2. Year on Year Growth
3. Relative Market Share and the Boston Consulting
Group (BCG) Matrix
4. Penetration and Double Jeopardy (DJ)
5. Practice Time and Initial Coursework Q&A

25
Interactive Activity - MPM
Dashboard Practice 3
Market Share Metrics, Growth Trends, Brand Penetration
& Double Jeopardy Effect using Looker Studio & GA4
 University of
@Southampton

MPM Dashboard Practice: Market Share Metrics, Growth Trends, Brand Penetration & Double Jeopardy Effect

Attached Files: ¢\ [ MPM Dashboard Practice 3-Market Share, Growth Trends, Brand Penetr.doo® AV (1.121 MB)

Looker Studio ~ A¥
Google Looker Studio (initially known as Google Data Studio) provides businesses an online tool to capture, process, and convert data into customizable stories. It consolidates all your data sources into a unified reporting experience. Create
visually appealing and informative dashboards that are easy to interpret, share, and customize.

GA4 Demo Account A¥

The Google Analytics demo account is a fully functional Google Analytics account that any Google user can access, The demo account is a great way to look at real business data and experiment
with Google Analytics features.
II Tasks:

» 1. Set up your account and GA4 data

¢ 2. Build Market Share Metrics
* 2.1. Unit Market Share
» 2.2 Relative Market Share
» 2.3. Use a Bar Chart to Compare
Different Competitors’ Market Shares
Google Sheets is a spreadsheet application and
* 3. Year-on-Year (YoY) Growth part of the free, web-based Google Docs Editors
¢ 4. Brand Penetration & Double Jeopardy suite offered by Google. Google Sheets is available
Effect as a web application; a mobile app for: A... More v

Source: Wikipedia >

R Vi University of
evie @Southa‘npton
W

1. Strategic Metrics: market share analysis

2. Managers spend a lot of time concerned about market

share — but without deconstructing some of its underlying
trends, the results may be misleading.

30
 University of
@Southampton

Next Week
Topic: Consumer Mindset metrics: Share of Hearts and Minds
Activities: online eye-tracking platform set-up

Contact
Email: Ying.Feng@soton.ac.uk
Office Hours: by appointment via email

Any Questions?