Market Share and Value Added: Advantages to Fee-Based Database Searches

Amelia Kassel, MarketingBase, amelia@marketingbase.com

Edited by Bea Vanni, bvanni@remarkablesolutions.com

Information brokers (IB) can offer clients an important valued-added service by providing research on market share and opportunities for the client to extrapolate the data. By understanding market share, knowing how to find it, and providing data to calculate, information brokers furnish companies with the kind of information they rely on (along with other industry statistics) to learn about competition – and ultimately to help develop short- and long-term strategic business and marketing plans.

In Turkey, for instance, if a business can gain information about who is getting credit, how much is given and under what circumstances, they could better forecast their own possibilities of getting their market share of available funds, which is also usually a major part of a company's strategic planning. A clear example is the past state of affairs for Turkish SMEs documented in Turkey in Transition (Kocak, 2006).

"Since credit was directed mostly to large enterprises, the SMEs (small and medium size enterprises)...had many difficulties in accessing the credit needed to fund their operations and investments. Andrew Vorkink, Worldbank Turkey Director, argues that when additional steps are taken to remedy the financial sector...it would be possible to unleash a European Tiger:" http://www.remarkablesolutions.com/Turkey_in_Transition.pdf:

With my vast background conducting numerous projects about market share and answering questions about financial and economic data, to include preparing a budget for such searches, I will answer some of the questions that potential clients usually ask but may lack clear information about the process.

What is Market Share? Some Definitions

The Duke University Libraries website of market share resources offers the following definitions of market share (http://www.lib.duke.edu/reference/subjects/business/m_share.htm):

§         Market share is the ratio of sales of a brand to the total sales of that product-type in a defined area (county, continent, etc.).

§         Market share is also defined as the ratio of sales of a company's entire product line to the total sales of all related companies.

§         Market share is usually presented as a percentage, although sometimes a raw number of sales or units is provided.

§         If the total raw number is located, you can calculate the market share percentage by dividing the brand's number by the total number, and multiplying the result by 100.

Where Do You Find Market Share Data?

One method used by companies to assess their own market share in the U.S. is to obtain Economic Census Data from the U.S. Census Bureau. The Economic Census “profiles the US economy every five years from the national to the local level.” Reports are available for geographic areas, http://www.census.gov/econ/census02/guide/geosumm.htm, SIC-based Comparative Statistics 2002 Economic Census: Table 2. Advance Comparative Statistics for the United States, http://www.census.gov/econ/census02/advance/TABLE2.HTM, and Zip Code Statistics http://www.census.gov/econ/census02/guide/g02zip.htm#START.  Note, however, that the Economic Census is taken every five years with various reports released throughout that period, sometimes quite slowly. Depending on the industry and the situation, Census information may not be current enough on the one hand, but on the other may be the only way to develop hard data that gives you a feel for developing market share.

Apart from census data, business and trade journals often report on market share. Articles about market share for Internet browsers or that held by automobile manufacturers appear fairly regularly. Other sources for market share are consulting firms who often provide free reports on the Web (or else charge very expensive annual fees with information only available to their subscribers), investment brokerage reports, and off-the-shelf market research.

Although analysts’ reports and off-the-shelf research are expensive, many of these companies distribute their research by the page through major online database aggregators such as Dialog, Thomson Business Intelligence (formerly Profound), and LexisNexis, which are fee or subscription based. From such sources, an online researcher may be able to quickly search and zero in on market share for major industries and large companies by using the terms "market share" or "share of the market."

For accurate and targeted data that can be retrieved within a few days' time, however, a company's best bet may be to hire an Information Broker to search these fee-based databases.

Market Share Searches: Are They Fast, Easy and Cheap?

At first glance, finding market share may seem easy to do. Frequently, the sources that cover market share focus on public companies or large private (unlisted) companies that are major players. In these cases industry statistics and financial data are readily available if you know where to look.

A student looking for market share for the Gap, an apparel company, without much luck asked me for advice. When I conducted the research, I made sure to check sources in the apparel industry to avoid retrieving information for the word “Gap” in another context that are false drops.  In another case, a Google search about the information industry market share, led to a website press release from Outsell, Inc., a company that provides market research about the information industry.

Despite the sometimes fast and low-cost/no-cost access to market share answers via Internet research, there are times that more searching is necessary. . When looking for private company market share, or for divisions or subsidiaries, the research process is more complex. The same holds true for researching individual market segments within a broader industry or Standard Industrial Classification (SIC) code; or for multiple market segments within an industry, and niche markets. Much depends on the company, industry, or segment you’re researching.

When market share data does not readily pop out of online research, it’s often necessary to provide information from an array of sources. Research can become time consuming and delivery can consist of a compilation of articles and then extracting data from them. When time, budget, and expertise permit, an analysis is included.

In some situations, the next steps may consist of primary research in the form of telephone interviews, competitive intelligence (CI) research, or a benchmarking study. With enough background, either from in-depth secondary research or more extensive primary research, it’s possible for an information broker to develop assumptions or extrapolate data about market share as mentioned in the beginning of this article

Problems of Extrapolating Data

One method for conducting additional research is triangulating when gathering market-share data using such primary research methods as telephone interviews:  One author writes:

Triangulating means comparing results about the same question from different sources to ensure that responses are not biased; verification strategy entails interviewing multiple people in the same organization to crosscheck sales figures, and by asking competitors their opinions about the accuracy of the responses received. You should also then multiply the average price of the unit by the unit sales to see if it matches the dollar sales given in the interview. [Métayer, Estelle. How to Calculate Market Share, Issue 9, July-August 2000]

How a Market Share Question May Grow: An Example

One example illustrates how the research can grow, despite what seemingly appears to be a straightforward question. I was asked to provide market share for the insurance industry. I found that market share discussions were segmented by categories such as automobile, property and casualty, life, and health. Within each segment, there were about two dozen articles published between a time span of the most recent one-year period, each expressing market share in a different way. The titles below give you a flavor for how market share is described for automobile insurers:

• Competition Among Leader Auto Writers Speeds Up
• All Commercial Auto – By State
• All Private Passenger – By State

What at first glance looked like it should have been an answer to one question became a project involving multiple segments from many perspectives that took 15 hours of time, plus $572 of database expense. The deliverable contained an executive summary combining narrative, bulleting, and tables that synthesized all the information into a 12-page report and the accompanying research consisting of 284 pages, organized by market segment.

Private Company Market Share Projects

In the example above, I found many articles about market share. However, when researching market share in industries where most companies are private or unlisted, it’s often necessary to provide industry and market statistics, industry and macro-economic trends that can affect market share, company background, or any other bits and pieces of information that shed light on a company’s place within their segment.

Implications for Market Share Questions

What should a client expect an information broker to do when they get market share questions? Possible approaches may include:

Step 1. Conduct a narrow search using market share terminology with a goal of uncovering a source that reports actual market share.

Step 2. Conduct a broader search with a goal of uncovering related data to help with assumptions or extrapolations.

Step 3. When market share is not found, and there is no information to extrapolate from “Next Steps” include a recommendation for additional research.  Clients find that specific alternative techniques are important to know about and help them with decision making about further direction to take.

Budgeting Guidelines

The cost of research will depend on what an information broker knows or doesn’t know and the IB's assessment of potential research methods for finding market share. Some considerations are related to:

• Client Interview – Expect the IB to try to elicit enough information from you to assess the relative or potential complexity for finding market share?
• Industry Background – Does your IB already have some knowledge of the industry or major players?
• Preliminary Research – Will it be necessary to conduct background or preliminary research first? If so, expect to budget for this work.

Taking these factors into consideration helps with the budget process. I encourage my clients to authorize Steps 1 and 2 above at the same time when I quickly ascertain that the project could become more complex. After completing secondary research and evaluating results, the IB is equipped to know whether primary research will be required.

Final Tips

More complex research is usually required for:

• Industries dominated by private companies
• Industries with few players, usually private
• Emerging industries
• Local businesses or companies
• Companies operating in a narrow market niche
• Large industry categories with multiple market segments

The Bottom Line

When a client asks for market share, an experienced researcher knows that the answer may lie around the corner, just inside a press release from a market research firm who has recently reported about an industry – and this information may even be free or low-cost. Or, the answer could involve a multi-step process consisting of uncovering information from a wide range of sources and synthesizing results, or recommending further research. All facets entail value-added knowledge and services provided by information brokers.

Searching for Market Share Online

There are many places to derive the data searched for, and much of the time it may only be found in the fee-based or subscription-based databases. An information broker will use a variety of sources depending on the complexity of the search, the timeliness of the sources desired, and at what time in the interval of data collection a particular database may input information.

Sometimes, an IB will face drawbacks when the database is based on an annual print version and misses the most current literature available and/or the database does not cover narrow market segments and niches.

Business & Trade Databases

Your information broker may be able to access a variety of databases from Dialog, Factiva, LexisNexis and other vendors that include business and trade journals. Each database below can be searched for a particular product, service, company or industry in conjunction with the controlled vocabulary (market share or market shares) term provided by:

ABI INFORM and Business Dateline; Business and Industry and TableBase; Gale Group PROMT; Gale Group Trade and Industry Database, and Investext.  Factiva and LexisNexis offer specialized index terms in their systems.

Annual Reports

Annual reports, often available from company Websites, are another source of information. Some provide market share of a company's products for investors and public relations purposes.  Cull through the introductory material or management discussion found in many annual reports.

Publisher’s Web Sites

Identify the major professional and trade magazines that write about the product, service, and industry, and check the publisher’s Website for the most current issue, often posted prior to publication. Because of time lags for indexing or for other technical reasons, aggregators such as Dialog and other systems may be behind from a week up to two months. The current publication is almost always at the Website at no cost, even when subscriptions are required for back issues

(c) 2006. All rights reserved. No part of this document or information may be reproduced without the expressed written permission of Amelia Kassel amelia@marketingbase.com. http://www.marketingbase.com