Research Tips (4): Market shares and rankings

Market share for a company or a brand is usually expressed as a percentage of the total market. Or, at least, it should be, but it's often the case that shares can be massaged upwards by taking a narrow view of the "total market".

Let's say we read in a press release that "Brand X has a dominant 60% market share". We need to ask a few questions:

1. Is the share of volume or value? (sometimes, "unit" or "Sterling" share respectively). If Brand X is an economy brand it could have a dominant position in units but the Sterling leaders could be those selling fewer units at a much higher price.


2. Share of which distribution channel? For many products, sales through multiple retailers are exhaustively researched (by retail audit systems) but what about independent shops, mail order, outdoor markets, and of course, e-commerce?


3. Is own label share included in total sales? Manufacturers understandably like to measure their brands' performances against other brands, but the picture becomes distorted when the stores' own label accounts for much of the market.

So, Brand X could have 60% of the total market by value. Or it could have 60% of branded unit sales (excluding own label) through multiple grocers, and its overall market value share could fall to 30% or less if the comprehensive market, by value through all outlets, was measured.

How important is brand share? How much does it matter? For manufacturers, gaining and keeping a listing in multiple retailers depends on proving that their brand is in demand and ahead of its competitors. Changes in brand share, up or down, are also a vital indicator of the strength of a brand, including its marketing and pricing strategies.

Outside the conventional retail channels, brand shares are usually harder to calculate, and that includes many leisure markets. Ascribing market share to Alton Towers or JD Wetherspoon would depend on agreeing value/volume totals for the theme parks or pub markets - not an easy task. Where statistical shares of a total are impossible to come by, researchers may have to make do with rankings based on objective data (e.g. turnover, from financial reports). If that fails, the subjective opinion of companies in the trade in question, or suppliers to that trade, may be the last resort. B2B market research often includes questions to responding companies about major competitors.

Finally, there are occasions when market shares can be massaged down, not up! This is usually done to satisfy government regulators whose aim is to prevent monopolies developing. As more industries consolidate around a handful of major players, this temptation to under-estimate market shares may become more common.

Corporate sponsorship - risk or reward?

Sponsoring either sport or the arts is always a risky sort of marketing venture, although the rewards can, if events turn out right, easily outweigh the benefits of ordinary advertising.

In sport, the thrills and spills involved in attaching one's corporate name or brand to teams or events were amply illustrated, across the British Isles, in the closing months of 2007:

• Rugby Union's World Cup, hosted by France and televised by ITV across six weeks of autumn action, turned out to be a boon for the sponsors of England and South Africa, both making the Final in place of the anticipated clash between the hosts and/or the Antipodean giants. England's sponsors, including O2, did well out of coverage considering that South Africa had thrashed England 36-0 earlier in the tournament.
• England's football team took over the flag-flying duty in November, but if the rugby team had stunned its supporters by reaching a Final, the English football fans had a shock to come as their team narrowly failed to qualify for Euro 2008, the national championships.
• Scotland and Northern Ireland were nearly given the chance to gloat over English failure but they, too, fell at the final hurdle for qualifying for Euro 2008. Neither did Scotland, Ireland or Wales cover themselves with glory in the Rugby World Cup.

England's Euro 2008 failure was broadcast as a matter of concern for sponsors like Umbro, the team's kit supplier. (Ironically, Umbro was the subject of a takeover bid by Nike - an even more lavish global "soccer" sponsor - at the time of England's untimely exit.) But the old PR idea that "any news is good news" does carry some weight in sponsorship. Nationwide, the building society with the biggest sponsorship commitment to British football, has a far-reaching programme that covers all four 'home nations' at amateur, women's and junior level, not just the famous senior men's team.

Smaller companies than Nationwide or Nike can identify, through sponsorship, with plucky under-dogs rather than predictable champions. There are endless opportunities for sports sponsorship at grass-roots level, including public/private "matched" funding through the Sportsmatch scheme.

Another tactic for sponsors is to spread the risk across more than one sport. Vodafone has been prominent in this respect for more than a decade, paying handsomely to attach its name to the England cricket team, Manchester United, the UEFA Champions League and horse racing (including the Vodafone Derby). In motor racing, the second biggest sponsored sport after football (mainly attributable to Formula One races), Vodafone's sponsorship of the McLaren Mercedes team came up trumps in 2007 when the young English driver, Lewis Hamilton, broke through as a major new star of Formula One.

Putting all the "deals" together, sports sponsorship is worth at least £1 billion a year in the UK and the forthcoming London Olympics (2012), Glasgow Commonwealth Games (2014) and, possibly, the FIFA World Cup in 2018, will guarantee record spending over a long period. The organisers of the London event have already targeted £625m worth of sponsorship income.

For arts and culture, the burgeoning growth of sports sponsorship is worrying in that the sector has been struggling to regain the heights of the Millennium celebrations. Arts & Business, the official forum for the arts and their sponsors, has recorded static figures from businesses although the arts, more so than sports, are also supported by non-commercial donations from individuals and trusts.

To offset the overwhelming appeal of the Olympics to sponsors, the DCMS (Department for Culture, Media and Sport) is planning a Cultural Olympiad - "a four-year celebration of the UK’s cultural life that will be a perfect curtain-raiser to the Games in 2012" - which will embrace everything from a World Cultural Festival, the International Shakespeare Festival and the 5-rings Exhibition down to grass-roots community arts.

References:

Photo: woodym555 (Wikipedia)

http://www.aandb.org.uk/

http://www.culture.gov.uk/

BBC buys Lonely Planet.... unfair, they cry!

The news that the BBC had bought up Lonely Planet, the famous travel guide publisher, brought out the expected cries of anguish from commercial publishers. The Financial Times asked how a BBC-owned Lonely Planet would make a contribution to "the cultural life of the UK", supposing that to be the remit of the BBC, while the Conservative party reaction was that the BBC was "nationalising" a publisher.

The Lonely Planet purchase may have escaped even louder cries of Unfair! from the private sector because its HQ is in Australia and it was controlled privately by its founders. Competing with Lonely Planet in guides to budget, independent travel are Let's Go, the Harvard-based grandaddy of backpacker advice (founded 1960), the Rough Guides and Time Out.

Low-cost flights have fuelled the demand for guidebooks which tell you where to stay and eat on a budget, although green-aware young people are worrying about the extra low-cost flights and, in some cases, about how the budget guides prevent travellers from contributing much cash to their destinations, often poorer countries.

The deal certainly has tantalising implications for the leisure side of UK media. Lonely Planet was actually bought by BBC Worldwide, a commercial subsidiary of the publicly-funded Corporation. The BBC is paid for by the Television Licence Fee, effectively a form of taxation to support public-service broadcasting; the latest government review means that the Fee will continue until at least 2016, taking the BBC well into the new digital era of broadcasting as a tax-subsidised corporation.

BBC Worldwide had sales of £810m in 2006/07, generating handsome profits of £111m, and there is no doubt that the BBC has benefited from its public television and radio franchise in launching into other media and entertainment markets (video, music, books, magazines etc). The Worldwide arm is believed to have several hundred million Pounds to spend and is likely to focus its investment on digital media, particularly online products. The BBC's main website is already one of the first ports of call for surfing the Web in the UK, with highly rated news and sports pages.

Lonely Planet may have been a pioneer among travellers researching their trips before setting off but independent "reviewing" has flourished, even for package holiday and luxury hotel users. TripAdvisor is the main player but sites like Holidays Uncovered tell you where to go for the best (or worst) karaoke nights and, in one case, which hotel to avoid because of the wild dogs running around the hotel gardens....

Photo source: lvivlviv.com