Market Modeling

Market Share Forecasting involves forecasting the total market and your own consumption, and estimating the share of the market. In the retailer to consumer model, what matters most is the shelf take-away. Marketing Strategies aim to maximize shelf consumption (and usage) and increasing own share of that consumption.

Introduction

Market Share Forecasting involves forecasting the total market and your own consumption, and estimating the share of the market. In the retailer to consumer model, what matters most is the shelf take-away. Marketing Strategies aim to maximize shelf consumption (and usage) and increasing own share of that consumption.

Depending on the industry, forecasting the total market for a particular product may be as easy as obtaining it from the external sources to estimating and validating market estimates through a series of forecasts involving syndicated data and POS data.

Determining Market Share

Share estimates of the total market can be done as an objective or a target market share estimate based on the promotional plans and budgets committed to achieving that share. The other option is to forecast consumption independently and derive the share through two different estimations, namely the market and the consumption.

Sources of Consumption Data

The best source of consumption data is the channel closest to the consumer. The retailer has the cash register data but may have difficulties organizing, analyzing and checking the veracity of the aggregated store level data. Commercially available syndicated data are the following sources:

Since Wal-mart and Wholesale Clubs do not provide cash register data to the Syndicated data sources, the data available from these sources are ex-Wal-Mart and Clubs. To compare it to the total channel shipments, you have to get Wal-Mart and Clubs POS data directly from the retailers and add it to the Syndicated universe.

Coverage Factors

The Syndicated data covers most of the shipping universe however sales from small mom-and-pop stores and beach side stores are not tracked largely due to the difficulty in tracking down the cash register data from these outlets. The data providers usually estimate a factor for these using shipments versus consumption over a number of years. Hence this is really a derived estimate and a certain sense of business judgment is required to to use this factor.