Analysis of a marketing campaign for a meat substitute product

Market Share Measures

MARKET DEFINITION AND PARTITIONING

CHAPTER 2: PRoFIT, SALES, AND MARKET SHARE OBJEOTIVES 45

be increasin g anyway as category sales increase; market share indicates whetherthe-brand is growing faster than the competition. 2 Flat or Decliníng Markets (Mat

share is less important than sales in only way sales can increase in a flat o away from the competition. One mus lncreases are not the spurious results that sales are in fact increasing.

Because market share is simply relative sales, the sales measures describedpreviously are also used to ."ârr." market share. In using ,ro." o,"".u."r,the manager has to have access to competitors, or category sales against whichto assess the brand's own sales. Market share, like sales, can be me

sales dollars received. The rnanager s in units reveals how well the brand is the basic measure of market share informative because it reflects the e are in turn usually related to profit. avenue to profit, for instance, might be share and an increasing dollar mãrket course, would apply to its sales trends

purchase alternatives. Actual competiti always easy to determine. For insiance:

' Recall the example of Heineken beer. Heineken has à 2 percentmarket share of the u'S' beer market; however, it has a 40 percent share of theu's' market for imported beers. But does Heineken just compete withimports or does it {sg compete with quasi imports such as Lowenbrau and super-premium u.S. beeis such as r¿i"tr"roui rrro, rr"ìnlten,s .,true,, market share is neither2 percent or 40 percent but sorne ngu..ìl U"t;;.

' Xerox copiers: Does Xerox compete *ittt ull "opi"r.,

i-nïu¿ing cheaperdesk-top inodels, or maiirly against other expensive, high-speed, murtipre-copy machines?

' sanka-brand coffee: Does sanka compete with ail coffees, or just instantcoffees, or just instant decaffeinated coffees ? ' Digital's compurers: Does Digital Equipment corporation compete with

46 PART 2: MARKETTNG oBJEclvES

IBM for all types of computers, or is Digital's "true" market currently in mid-sized computers?

As these examples indicate, market share objectives can be statistically and stralegically misleading if they are not based on an appropriate competitive market definition.

Partitioning the Overall Market to Find the True Market (Competitive Frame)

An analytical technique of great value to managers in deciding on the "true" market or "competitive frame'l for a brand is known as "partitioning" or

;:'#ä.T:ï'.Tålii*î,tll;.ïåìH":ì"iåJiil,lilif üäl;:ff ffi f i has been applied in many ways by others.

The basic idea of partitioning is that the overall market or product category (often industry-defined) can be successively subdivided into partitions or sub- markets which increasingly approximate the true market for a brand or brand- item (as defined from the consumer's standpoint). As you go "down" the hierarchy of partitions, perceived substitutability increases, and actual brand or item switching behavior increases. This is shown in Figure 2.3.

Bases for Partitions The partitions that divide a market into sub-markets (in consumers' eyes) can be based on a number of factors. Most often these are:

I Product forms, where there are distinct physical differences between products (for example, large, medium or mini-computers; margarine in sticks or cups)

2 Benefits sought, where products vary in the features they emphasize (for example, cavity prevention or fresh taste in a toothpaste; status or price-value in a pair of jeans)

FIGURE 2.3 Total market partit¡oned into sub-markets in which each brand or brand-item faces the most direct competition.

Market

Sub-market' Sub-market Perceived

subst¡tutes Actual switching

CHAPTER 2: PBOFIT, SALES, AND MARKET SHARE OBJECTTVES 47

3 usage situations, where benefits sought in the "same" product may vary over usage situations (for example, "special occasion" beers versus "regular" beers; family versus adult movies)

4 Brand names, where the brand name signifies a particular ,,image,'or quality level and various items are available under that brand name (for example, Black & Decker versus Rockwell ¡iower tools; Macy's versus Saks Fifth Avenue department stores)

Partitioning and "Positioning" Partitioning is one aspect of "positioning." A brand can be positioned, either deliberately or by consumer perception, in one sub-category or another of the total product category. For example, New coke is positioned in the regular cola sub-category of the cola market and, more broadly, the soft drink market; Sprite is positioned in the regular lemon- lime sub-category.

Later, when we examine brand attitude, we will see that a brand can further be positioned within its sub-category with reference to other brands with which it competes. This is the second aspect of "positioning."

Here we will focus on the category-membership (competitive frame) aspect ofpositioning rather than the brand-differences aspect. Partitioning is relevant only to the former.

Determining the order of Partitions The "trick" in partitioning is deciding on the order of the partitions. For example, in choosing a yogurt, do consumers decide first on a brand nam'e and then on a product benefit such as flavor? or do they choose a flavor first and then a particular brand? In other words, the yogurt market could be partitioned in at least two different ways, as shown in Figure 2.4.

Note the importance of the different partition orders. If the yogurt market is pafitioned by consumers in the manner shown in panel (a), Dannon's main advertising and promotion objectiie would bq first to convince consumers to buy the Dannon brand, then offer flavors that suit "Dannon lovers." Alter- natively, if the yogurt market is partitioned by consumers in the manner shown in panel (b), Dannon's main advertising and promotion objective would first be to appeal to, for example, "strawberry lovers," then convince these consumers that Dannon offers better strawberry yogurt than any other brand.

Fortunately, determination of the correct order of partitions need not be left to intuition. As we shall see at the end of this section, there are various consumer research measures that can identify the likely ordering by following the basic rule mentioned earlier: that perceived substitution and actual switching will be greater the lower the partition is in the hierarchy.

lmplications of Partitioning for Setting Market Share Objectives

Implications of partitioning for .setting market share objectives are best illustrated by a further example-this time with actual data (deliberately several years old to protect company confidentiality). Table 2.4 shows market share

48 PART 2: MARKETTNG oBJEclvEs

Dannon

strawberry (etc.) Lemon

Strawberry

Dannon (etc.) Light 'n' Lively

FIGURE 2.4

TABLE 24 MARKET SHARES FOR PERSONAL DEODORANTSf

1973 1976

Llght'n'Lively

Stráwberry (etc.) Lemon

Lemon

Dannon (erc.) Light'n' Lively

(a)

Yogurt

(etc.)

(b)

Yogurt

(elc.)

Alternative partitioning of the.yogurt ma(et. (a) Primary competition between brands followed by frequent switching between flavors. (b) Primary competition be veen flavo¡s followed by frequerit switching between brands.

(/"1(vù

1 Company shares Gillette Bristol-Myers Procter & Gamble Carler-Wallace

2 Brand Shares Ban (B-M) B¡ght Guard (G) Sure (P&G) Anid (C-W)

25 13 11

14

21

20 18 I

12 20 4

14

19 17 11

9

t The f¡gures were compiled by Maxwell As- sociates and reported in Adven¡sing Age, May 9, 1977, p. 68 (used with permission).

CHAPTER 2: pROFtT, SALES, AND MARKET SHARE OBJECTTVÉS 49

trends for the personar deodorant market several years ago.17 panel I showsmarket shares by company and panel 2 shows maiket shaîes by brand. The company share trends arê not very informative ior ttre a¿ve.tising andpromotion manager responsible for an individual u.un¿. gut even moreimportantly, the brand share trends are not very informative either, unless themanager knows how the deodorant market ii partitione¿. it is the trendsoccurring within the partitiors that are importánt i". .ãttìrrg market shareobjectives. Figure 2.5 shows a re

for personal deodorants. deodorants has its prima

and those who prefe

lgecjfc type of applicaror from wirhin their preferred Finally, they select a brand from within the specific

Note that market share tre¡ds no\¡/ depend cruciaily on market definitionvia partitioning. At the time between the market sharL measurements, 1973and 1976, there was a major crackdown on aerosol spray containers becauseof fears of damage to the earth's ozone layer. Spray, íori u lu.ge share ofmarket, from 75 down to 55 percent, despite tt "

int.á¿u"tion or non-aerosol(pump) sprays which reversed some of this trend. Non-sprays benefited witha rise in market share from 25 to 45 percent. Non-spray suusiaia.y products,

FIGURE 2'5 Market structure for personal deodorants. Market share trends are shown in parentheses. Firstfigure is i973, second is 1976, an¿ ãnow shows treÀd. personal

Deodorants

Sprays

Aerosol Pump

(7s aa¡ (o 7',) (s

Brands Brands

5s)(75

Non-sprays

(2s 4s)

SticksRoll-on

Brands

25) (6 Powder

11) (10 e)

ErandsBrands

50 PART 2: MARKETING oBJEcrlvES

roll-on and stick deodorants, benefited simultaneously, although the other non-

spray alternative, powders, remained fairly constant in usage'

What if you had been the advertising and promotion manager for Procter

& Gamble's Sure brand in 1976? Sure,aroll-ondeodorant,shouldbesettingitssightsonlla¡eeincreasetn

market share. This was not at all evicent from panel 2 in Table 2'4, where

Sure could not be sure that its rise from 4 to ll percent did not represent a p"ut ,nur" for the Ut""¿. i" fact, from Figure 2'5' Sure may have

gained a lot

of this increase urv*äv, *ìrh litûe advertising or promotion, simply by being

in the growing category of roll-ons' ButSurehasachancetodominatetheroll-oncategory:Surehasllpercent

rare ofthe roll-on category' Sure shguld omotion spending heavily ratirer than

ver, the message strategy, instead of e, should also stress its roll-on product

remind consumers that it is not one of

those "harmful" aerosols. The market share objective and strategy for Sure

(albeit hypothetical) would

noiù" evident had weïot known how the market was partitioned'

"De-paditioning" as a StrategY

Most product categories te levels and frequentlY fewe levels there are, the smalle become. Partitioning is esse

One could continue to seg she wanted, Provided the fir mixes.,,Thiscanbeprofitableinsomeindustries,suchasgovernmentcontract

rtitioning partition roadly tc

address two or more sub-c The reason that de-Parti

on being able to offer acom technological or PsYchologi the most difficult, but there and Aqua Fresh toothPaste the gel form (fresh taste) interestlng examPle is Mic premium "image" in an att together.

However, one must be sure tha nt the combinatio: of forms or benefits, raising the gical barriers' Fo example, in 1981, a new non-pre ðalled Gemnisyr

CHAPTER 2: PROFIT, SALES, AND À/ARKET SHARE OBJECTTVES S.l

combined aspirin with acetaminophen (the Tylenol non-aspirin ingr-edient) in an attempt to appeal to consumers in both the aspirin and non-aspirin partitions of the pain remedy market. But how many consumers would want both ingredients after having learned from past advertising campaigns that aspirin and acetaminophen are so different? Another example that auto manufacturers have hadproblems with is the concept of a "luxury small car"; luxuriousness

Partitioning Markets for Durables

However, even for durables, customers do change brands or suppliers and, more pertinently, they are Iikely to confine their selections to a sub-set of similar offerings. Thus, it is still meaningful to partition markets for these less frequently purchased products so that the firm can identify where its true market is and who its real competitors are.

Durable goods partitioning examples include savin, who has chipped away at Xerox by specializing in the small copier sub-market. Similarly, Midas hai concentrated on the sub-market of auto muffler buyers who want firm quotations and brand name guarantees in the notoriously risky (overall) auto repair and service market.

Partitioning is, therefore, a relevant means of market definition for virtually any type of product or service. As we shall see shortly, the main differencã with durables is that the partitioning measure is likely to focus on customer- perceived substitutability rather than, as for packaged goods, on brand- switching behavior.

THE POSSIBILITY OF LIMITS TO MARKET SHARE

It is comparatively easy to understand that there is a limit to sales of a producî calegory (not everyone wants every product and those who do want it have some limit to oonsumption capacity), but it is rather revolutionary to contem- plate that there may be a limit to a brand's market share of sales within the product-category sales level. After all, isn't it possible for the firm with the best brand to retain 100 percent of a market, if first in, or to gain 100 percent of it, if a later entry? If there are limits to retainable or attainable market