{"id":545,"date":"2019-12-30T16:31:26","date_gmt":"2019-12-30T16:31:26","guid":{"rendered":"https:\/\/mattersgraph.com\/?post_type=insight&p=545"},"modified":"2026-04-09T01:37:33","modified_gmt":"2026-04-09T01:37:33","slug":"understanding-the-market-share-equation-in-diligence-and-in-value-gen-exercises","status":"publish","type":"insight","link":"https:\/\/mattersgraph.com\/ja\/insights\/understanding-the-market-share-equation-in-diligence-and-in-value-gen-exercises\/","title":{"rendered":"026: Understanding the Market Share Equation in Diligence and in Value Gen. Exercises"},"content":{"rendered":"

I\u2019ve been reflecting on Mark’s recent article about how to better capitalize on brand equity<\/a> \u2013 and particularly about those situations where you can exploit untapped brand equity.<\/p>\n\n

Mark promotes a winning investment formula of investing in cases where \u201cRBE > RMS,\u201d i.e., a company whose Relative Brand Equity is greater than its Relative Market Share. These situations are sadly not regularly identified, but when they are, they should be a high-powered investment engine. A logical question that surfaced in a number of the responses we received on Mark’s piece is: \u2018if you\u2019re one of the lucky (or talented) investors who has an opportunity like this in hand, how do you capitalize on that brand equity to drive market share gains?\u2019<\/p><\/div>\n\n

\n\n

Evaluating market share gain opportunities starts with understanding the market share equation. In theory, market share is \u201cearned\u201d through the product of three factors \u2013 awareness, availability and preference.<\/p>\n\n

    \n
  1. Awareness is theoretically simple \u2013 are customers aware of your brand? In practice, it is challenging to model as it requires an in-depth understanding of the buying situations that various customer segments will encounter. You need to understand questions like: Will there be robust exploration prior to purchase? Is the purchase routine and subject to habit or preference toward in-kind replacement? Based on the answers, you will assess either unaided or aided awareness and you\u2019ll set a relative bar for what constitutes awareness. Ultimately, you should be able to distill a tangible number \u2013 a percent of the customer base (preferably weighted by purchase volume) aware of your products.<\/li>\n\n\n\n
  2. Availability is practically simple \u2013 is a product from your company available and appropriate given the specifications required by the aware population? What percent of the prospective customer base do you cover with your channels? Or if selling direct, to what percent of the customer base is it economically competitive for you to distribute to (products with lower value by volume are typically less economical to ship)?<\/li>\n\n\n\n
  3. Preference is exactly the topic of Mark\u2019s post about using brand equity work to discover growth potential in ready to tap, latent brand equity. There are myriad ways to estimate your preference share \u2013 from qualitative focus groups to quantitative conjoint studies to synthesized estimates based on brand equity. The right answer depends on what data you\u2019ve got handy \u2013 and what level of precision you need and is realistic to expect from your customer base. (More mature markets will afford greater precision.)<\/li>\n<\/ol>\n\n

    The product of these three factors is your projected market share. The most common scenario we find ourselves tackling these in is when we run conjoint market simulators and try to connect preference share to market share, but I wish it were done more often.<\/p>\n\n

    Any cases with slower-than-hoped-for growth are good candidates for this analysis. You don\u2019t need perfect data: use what you have, make informed estimates where necessary, and see where the model takes you. In my experience, the greatest opportunities may prove to be in unexpected places.<\/p>","protected":false},"excerpt":{"rendered":"

    I\u2019ve been reflecting on Mark’s recent article about how to better capitalize on brand equity \u2013 and particularly about those situations where you can exploit untapped brand equity. Mark promotes …<\/p>","protected":false},"author":[82],"featured_media":0,"template":"","meta":{"featured_image_background_position":"","promoted":false,"promoted-priority":0,"footnotes":""},"sector":[],"topic":[101,106,85,86,80,55,105,84],"audience":[],"insight-category":[140],"class_list":["post-545","insight","type-insight","status-publish","hentry","topic-brand-equity","topic-customer-behavior","topic-market-share","topic-market-share-capture","topic-organic-growth-tactics","topic-purchasing-process","topic-untapped-value","topic-value-generation","insight-category-value-creation","author-jeff-merkle"],"yoast_head":"\n026: Understanding the Market Share Equation in Diligence and in Value Gen. 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