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MARKET SHARE- A

KEY TOPROFITABILITY

Group No. 3-

Swati Agarwal (01)

Devarshi Bajpayi (03)

Ashish Madnoorkar()

Nitisha Pagaria (33)

Saahil Sinha ()

Parnamoy Dutta(13) ()

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Why is

MarketShare

Profitable

Economiesof Scale

Market

Power

Quality ofManagement

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High MarketShare

More Profit marginon sales

Investment to salesratio declines

Lower Purchase-to-Sales ratio

More verticalintegration

Use owndistribution channel

Low cost of rawmaterial:

economies of scale& bargaining power

Decline inmarketing cost as apercentage of sales

Scale economies

Utilize moreefficient mass

media & marketingmethods

Use own salesforce instead ofcommissioned

agents

Bandwagon effect

for leading brands

Develop uniquecompetitivestrategies

Higher price forhigher quality

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Trend Variation among

Industries

Market share moreimportant for frequently

purchased products

Market share is moreimportant when buyersare fragmented

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ROI/Market Share link

&Strategy

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MarketShare

Goals

Buildingstrategy

HoldingStrategy

HarvestingStrategy

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I. Building Strategies

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II. Holding Strategies

Preserve the Status quo.

Relationship between ROI & Consumer

Behavior Higher ROI Charging Premium prices

Spend more thancompetitors on sales , advand R&D.

Large ShareBusiness

Higher ROI Prices are below market

average.

Relatively low spending onmarketing and R&D.

Small ShareBusiness

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III. Harvesting Strategies

Deliberately permitting fall of market share.

Obj Secure higher short run earnings and cash

flow.

PIMS Data indicates :Large Share Business

Harvest Successfully

Returns are higher on harvesting.

Small Share Business

Diff in ROI between Holding & Harvesting

are irregular.

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ROI is increased in short run & reduced in long

run.

Depending on two factors

Management assessment ofdirection and timing ofdevelopments.

Preference for immediaterather than deferred profits.

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Balancing Cost & Benefits

PIMS studies support the proposition

Market share is positively related to ROI.

Effects on management decision

Make or buy decision

Choosing the medium ofadvertising

Alteration in price or quality

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Key Tools to interpret Market

Share

BCG Matrix:

Hig

h

Low

High Low

Prioritize Divest

LiquidateInvest

Market share

M

arketgrowth

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GE 9 Cell Matrix:

Winners Winners QuestionMarks

Winners

Profit

Producers

AverageBusinesses

Losers Losers

Losers

MarketAttra

ctiveness

Business Strength

HIGH

HIG

H

MEDIU

M

LOW

MEDIU

M

LOW

Indices:

Build

Hold

Harvest