Descriptive MARKET PERFORMANCE

Analytics
Descriptive Analytics: Insight into the past

 describe or summarize, raw data

 allow us to learn from past behaviors

 basic arithmetic like sums, averages, & percent changes are used.
Descriptive MARKET PERFORMANCE
METRICS
Analytics
Market Share
Market Share – Total Market Share
Market Share – Total Market Share

 Market share is an indicator of how well a firm is doing against its

competitors.

 Market definition is never a trivial exercise.

 Example: How would you define the market segment for Opa Fries.
Market Share – Total Market Share

Geography Customer Type

Market Share – Served Market Share

 Served Market: That portion of the total market for which the firm competes.

 This may exclude geographic regions or product types to which a firm does not
serve

 In the airline industry, for example, as of 2020, Emirates did not fly to Pakistan.
Consequently, the Pakistan would not be considered part of its served market.
Market Share – Relative Market Share
 Example – Compute Market Share
a. Compute Total Market
Company A Company B Company C Total
Share for company A
b. Compute Served
Segment 1 ----- 150 200 350
Market share for
Company A.
Segment 2 20 70 ---- 90 c. Compute Relative
Market Share for
Segment 3 50 ---- 100 150 company B.
d. Compute Relative
Total 70 220 300 590 Market Share for
company C.
Market Concentration

 Market Concentration: The degree to which a relatively small number of

firms accounts for a large proportion of the market. This is also known as the
concentration ratio.
 It is usually calculated for the largest three or four firms in a market which is
referred to as “three firm concentration ratio” or “four firm concentration
ratio” respectively.
 Market Concentration

3-firm

4-firm

95% 85%
Market Concentration

 Herfindahl-Hirschman Index (HHI): A market concentration

metric derived by adding the squares of the individual market
shares of all the players in a market. As a sum of squares, this index
tends to rise in markets dominated by large players.
Market Concentration

2500 1600
400 441

225 400

100 169

25 25

3250 2635
Market Concentration

Monopoly

Competitive
Market
Market Concentration
Market Concentration

How HHI is Interpreted

Less than 1500 HHI Low Concentrated Market

Between 1500 and 2500 Moderately Concentrated Market

Above 2500 Concentrated Market

In some countries, if a merger increases the HHI by 200, the merger is considered
a significant power enhancement and may raise Anti-Trust Concerns