The abstract:
Actually, this type of market research is the essence and background of any marketing approach, especially if some new product development or new market exploration is concerned.
Starting this section with the obvious – before any commitment you need to know or estimate your potential market size, market share or penetration rates for the products of your competitors. This is the area where volumetric sizing market research definitely might help.
Some elements of volumetric sizing studies might be incorporated to the other and more complex research programmes. Using them stand alone you have very simple but robust research tools, where all is based on the market metrics itself.
Usually market metrics are used in business planning and marketing monitoring to keep the marketing programme on track, or to plan some specific shape and format of new, prospective venture. Please find below the descriptions of some pertinent market metrics with our abbreviations and comments:
The sizing and market estimating tools:
Market size
The pattern:
Market size is the number or value of units sold to a market in a given period (normally a year).
The data source:
Approaches include surveying manufacturers, of surveying the channel/distribution route, or surveys of end-users.
Some extra measurements and outcomes:
By taking market size (units and revenue) and dividing by the number of customers you can get estimates of basket size - how much each customer in the market is worth.
Eventually combining those figures with advert or marketing campaign success testing will bring you the estimation of the cost of acquiring one single customer.
Market share
The pattern:
Market share is the number or value of units sold in a given period for a manufacturer as a percentage of the total market size. It can be defined either as share of units sold or share of revenue. If the market size is known a company can infer its own market share based on its own sales data.
The data source:
It is possible to estimate share of revenue using published accounts, but some care has to be taken as manufacturers sale price is far lower than the end-retail price and different businesses may have different channel costs.
The significant limitations:
Difficulties with data collection (not every accounts is accessible and disaggregated to make share analyses possible).
Problems with corporate sensible data collection and processing.
Market penetration
The pattern:
Market penetration is the number of customers you have as a percentage of the total customers in the market.
The data source:
This can be on the basis of sales in a period (sales penetration) or installed base. Combining penetration with market share you can calculate sales per customer.
The pertinent outcomes:
Sales penetration divided by installed penetration gives your level of customer activity. You can also use this to assess customer loyalty - the percentage of customers who stick to your brand or your product/services . By looking through individual customers you can also estimate the share of wallet – what your clients have got in their portfolio of business relations.
If you would like to use Investzoom Market Research Agency's tailored measurements for your business, please do not hesitate and contact us.
