There are three market share metrics that when aggragated can be used
to gauge the effectiveness of your CMO and all marketing activities. These metrics are
the volume, value and vector of your market share.
1. VOLUME. Market share volume is the traditional notion of share measured in dollars or units relative to your competition. While volume is a good initial indicator, marketers need to know the value of this share and the trend of their share.
2. VALUE. Market share value attachs a quantitative value, measured by percentage margin, to your market share volume.
Having a large share of an unprofitable market is not sustainable.
Alternatively, holding a smaller share that is profitable may be
sustainable.
3. VECTOR. Market share vector is a trend measurement that depicts the direction your market share volume and value are heading, over time,
relative to your primary and secondary competitors. The vector has a
starting point, at least one intermediate measurement point and an
ending point, typically the conclusion of a campaign, or performance
review date of a CMO.
Market share vectors unambiguously measure enterprise success
relative to it's peers. The primary function of market share vectors is
to gauge the effectiveness of your marketing activities and the
performance of your CMO. Market share vectors are the CMO's version of
quota's, which sales reps are generally evaluated on (yes, I am saying
that CMO's should have market share quota's and be judged on their
ability to hit them). A few more comments on market share vectors:
1. Timing. Market share vectors can be used to judge effectiveness
over a multi-year career, a multi-month campaign or as part of an
annual review of budgets and plans. The vector requires a starting
point at which all competitors are measured, an intermediate point and
a concluding point that will be used to determine the vector trend.
2. Scaling. For start-ups or small firms with very small share,
market share vectors can be scaled down so as to meaningfully measure
actual performance. To scale down market share vectors simply select a
subset of customers, territories, segments or categories and measure
your relative share within that limited arena.
3. Influences. Poor vector performance may be due to influences
outside the realm of control of marketing and the CMO. But the same
thing applies to sales reps... there are many influences from quality,
to shipping, to design decisions that a sales rep must live and die
with, in their efforts to achieve a quota. The stark reality generated
by market share vectors needs to be tempered within the context of
issues, problems and opportunities faced by the enterprise and by the
CMO. Market share vectors set up a baseline framework from which a CEO
or CFO might begin to understand the effectiveness of their CMO and
their marketing activities.
4. Intelligence. Some enterprises do not have the competitive data
necessary to measure market share vectors. Others may not have the will
or the interest to generate competitive intelligence. To the former,
they need to begin the process of establishing a competitive
intelligence competency... market share vectors are a great way to
begin. Regarding the latter, enterprises without the will or interest
need to understand the importance of external metrics and the peril
they place themselves in when they operate without these guide posts.
We have a simple Excel worksheet you can use to plot market share vectors. Shoot me an email and I'll send you the worksheet.
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