Market Share Research
Market share research can mean a lot of different things. For example, you could measure market share by volume – for example, the number of passenger vehicle sold in the UK by Ford in 2022 as a share of all passenger vehicles sold in that year. As long as the definition of ‘passenger vehicle’ is clear then the market shares will be properly understood.
For some markets, where companies provide services, such as accounting services, or logistics services, or consulting services there are no individual products to count and therefore the turnover or revenue associated with the services becomes the focus when calculating market shares. Of course, one must also have an agreed definition of the industry services provided and also an overall market value per year on which to base the market shares on if calculating revenue market shares.
With this approach, what makes market share calculations tricky is (1) consistent definitions of services provided and (2) financial accounting year end dates and reporting practices.
Market share calculations and definitions
Market share calculations and definitions can be a crucial aspect of market share research. When assessing market share within an industry, it’s essential to have well-defined categories of services. For instance, in industries like consulting, audit, or contract catering, there are generally accepted definitions for these services. This clarity in definitions helps clients determine how a company’s services stack up against its competitors.
However, there are situations where the boundaries between these service categories can become blurred. This ambiguity in the definition of services can pose challenges when calculating market share. It makes it more difficult to ascertain how a company’s market share compares to others, especially when the distinction between services is not clear-cut.
Ensuring that the categorization of services remains standardized and well-defined within a project is critical to providing more accurate and insightful market analysis to clients or stakeholders.
Market share calculations, segment reporting and accounting year ends
The reporting of revenues by companies can also be tricky to navigate, as some companies are publicly listed but provide group segment data or geographic data, typically by continent. However, they are not required to provide country-specific revenues as part of their normal group level reporting. They do however, report on a country basis in each of the jurisdictions in which they operate. For example, Compass Group is a UK listed company, but has a French subsidiary (and others) which reports financial data separately. For country market shares, these subsidiaries must be taken into account.
There are also smaller private limited companies that report financial performance, but this is not consistent across every jurisdiction. Equally, companies that have more than one business segment and report financials don’t always report the activity of those segments consistently across jurisdictions. In addition, the accounting year end of companies also varies drastically – therefore deciding where to allocate revenues in a particular year can also be challenging.
Our teams recent experience with market share calculations for a specific industry vertical across 30+ jurisdictions highlighted these very issues. The best way to approach market share research projects is to notate every line and provide estimates of revenues (where no actual data exists) based on variety of approaches depending on available data.
Clients must also be aware that the process is data-led, but some common sense approaches have to be followed to fill some gaps where data is just not available. When considering data across many countries, there are currency translations to consider across several years, but in general the financial reporting across countries is fairly consistent.