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Classic Market Share and M arket Share Theorem

Classic Market Share and M arket Share Theorem. Ted Mitchell. Competitive Analysis Using Market Share Theorem . Ted Mitchell. Add up the Sales Volume of you and your competitors. Look at Biz -Café Comparative Results for Industry Performance Total Number of Cups Sold in the Industry

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Classic Market Share and M arket Share Theorem

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  1. Classic Market Share and Market Share Theorem Ted Mitchell

  2. Competitive Analysis Using Market Share Theorem Ted Mitchell

  3. Add up the Sales Volume of you and your competitors • Look at Biz-Café Comparative Results for Industry Performance • Total Number of Cups Sold in the Industry • Total Revenue of Industry

  4. Market Share Calculation

  5. Your Market Share Your Sales Volume Total Industry Sales Volume Your Market Share = $8,666 Your Market Share = $27,475 Your Market Share = 0.3154 = 31.54%

  6. Your Market Share Average Market Share with 3 firms = 33.3% Your Sales Volume Total Industry Sales Volume Your Market Share = Looking Good or Looking Bad! $119,922 Your Market Share = $1,100,000 Your Market Share = 0.31.54 = 31.54%

  7. To Know if you are • If your marketing performance is good or bad • You need measures of your Share of the Industry’s Total Marketing Effort

  8. Using your Share of Industry Marketing Effort and Expenditure for Predicting Market Share Market Share Theorem

  9. Market Share Theorem Is a Very Important Concept “Your Market Share should be equal to your share of the industry's marketing effort” If you make average effort then you should get an average market share If you have 31.5% of the total industry sales then you must be spending 31.5% of the total industry marketing effort or expense

  10. Share of Marketing Effort • Share of total industry advertising budget • Share of total number of sales people • Share of the total number of retail stores • Share of total number of shelf facings • Share of total store hours open • Share of Promotion, Place, Product. Price • In practice it is normally measured in terms of dollars spent on marketing budgets.

  11. Share of Marketing Effort in Biz-Cafe • Share of total industry advertising budget • Share of total number of servers • Share of the total number of store hours • Share of product quality (relative is easier) • Share of price (relative is easier )

  12. Share of Effort CalculationShare of Total Promotion

  13. Share of Effort CalculationShare of Total Industry Promotion

  14. Share of Market Calculation Share of Voice: Share of Industry Promotion

  15. Market Share Theorem • Your Share of the Total Market, S, SHOULD be equal to Your Share of the Industry’s Total Marketing Effort, SoE • Market Share, S = 31.54% • Share of Effort, SoE = 30. 64% • 31.54% > 30.64% • Then you are more efficient than average that is a Good performance

  16. The difficulty is • To incorporate marketing efforts that are reflected in the firm’s product quality, hours of operation, shelf space, selling price etc. into the Classic market share theorem that deals with total industry sales and total industry marketing effort • Relative Market Share is easier to work with

  17. Any questions of classic market share theorem

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