How Marketers Measure Market Share

Edeling and Himme (2018) report that market can positively predict an organisation’s performance. With this in mind, measuring this metric is a key component to any business.

The first step to an accurate measurement of market share is defining the market. This should be made quite specific as to only reflect the immediate competition and not the larger market. This is so the measurement reflects their performance among relevant competition.

Another consideration is to look at revenue or the number of units sold. This should be chosen depending on the market and goals of the company.

Once these considerations have been made, Edeling and Himme (2018) explain two measures of market share:

  • Revenue market share: sales revenue as a percentage of market sales revenue
  • Unit market share: unit sales as a percentage of market unit sales


Edeling, Alexander and Alexander Himme (2018) “When does market share matter? New empirical generalizations from a metra-analysis of the market share-performance relationship” Journal of Marketing, 82(May), 1-24.


The Cost of Retaining Customers

If the acquisition of new customers is an expensive effort and the value these customers offer to your business, the focus should be targeted at customer retention. Keeping what you have.

This is a delicate balance for marketers and business as a whole with a delicate balance between spending too much and too little resulting in extreme negatives.

On one side, a business can spend too much on customer retention and result in no profit being made as the customer is not providing enough value to justify the spending on their retention.

The other end of the scale is neglecting customers to the point that they leave for a competitor’s product or a substitute.

Calculating the cost of retention can be done by dividing the retention spendings by the number of customers retained (Bendle et al. 2016). This number must be less than the value of the customer to prove profitable. The metric is not flawless and as Bendle et al. (2016) points out, there are 3 potential issues:

  1. It is unknown how many customers would be retained if there was no retention spending (i.e., calculating the baseline can be difficult)
  2. The metric may be difficult to calculate as it is not easy to isolate retention spending from other marketing spending.
  3. Using the metric in practice may be difficult, as the organisation might not want to know how much, on average, it will cost to retain any customer. Rather the organisation might be interested in knowing how much, on average, it will cost to retain specific types of customer (e.g., top tier).

Even with these issues considered, attempting to measure retention costs can, at the least, provide an additional data input to a better informed decision.


Bendle, NT, PW Farris, PE Pfeifer & DJ Reibstein (2016) Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, 3rd edition. Pearson: New Jersey

Qualifying Factors for a Marketer Meeting Customer Needs

When assessing what is seen as a qualifying factor, it must first be defined. McDonald et al. (2014) defines it as the factors customers expect to be delivered by all organisations in the market. It is looked at as the bare minimum to survive in a market.

Qualifying factors are required to deliver value for the customers. Marketers should look to determine what the threshold is for customers as to not exceed this by significant amounts. The reason being that exceeding this qualifying factor threshold may not hold much, if any return on investment for an organisation.

The purpose here can be seen as reducing dissatisfaction instead of increasing satisfaction as that is more of a measure for critical success factors.

This is a dynamic measurement and a method that can constantly measure the expected and achieved performance levels in an organisation is required to address and gaps in the expected results.

To enhance the accuracy of these measurements/factors, a clearly identified target market is also required and a pre-determined threshold for the gap of expected and achieved performance levels must also be established. This allows definitive actions to take place and a specific time and removes any delay in the decision process.


McDonald, Malcolm, Peter Mouncey & Stan Maklan (2014) Marketing Value Metrics: A new metrics model to measure marketing effectiveness. Kogan Page: London.

The Importance of Loyalty in Marketing Metrics

Bendle (et al. 2016) looks at loyalty as being more of a broad concept then a specific metric marketers seek to measure.

There are some key metrics that must be considered when attempting to measure loyalty. These include share of requirements, willingness to pay a premium, willingness to search, repurchases and purchase frequency (Bendle et al. 2016.

Loyalty is important as an indicator for future business and the higher the level of loyalty is a reflection that the company will be likely to receive future revenue from this customer. Bendle (et al. 2016) raises the dynamic nature of loyalty and given the highly competitive nature of most markets now, if a company fails to meet the changing needs of their customers, the new entrants are constantly evolving to threaten customer loyalty.

Willingness to search is considered the ‘acid test’ for loyalty but to accurately collect the data to build this metric can be difficult. It is defined as the percentage of customers who would wait to buy a brand that is (temporarily) unavailable rather than buy an alternative brand. This could involve the customer going through a different medium to purchase their preferred brand or purchasing the minimum amount of their lesser preferred brand until they can again access their preference.

Loyalty is a key aspect for marketers to consider when measuring the success of their brand, a high level of loyalty in customers can be a great indicator for a sustained competitive advantage and future success. Marketers must always ensure they are meeting their customer’s needs as the threat of a substitute or new entrant are constantly evolving in the competitive environment that exists in most markets today.


Bendle, NT, PW Farris, PE Pfeifer & DJ Reibstein (2016) Marketing Metrics: The Manager’s Guide to Measuring Marketing Performance, 3rd edition. Pearson: New Jersey

Marketing Research Methods: Qualitative vs. Quantitative

To put it simply, marketing research is the process of gathering relevant information to help solve a problem or identify an opportunity. While there are many complicated extensions to this definition, this is the core meaning.

The two main categories that we divide research techniques in to are qualitative and quantitative.


This approach is centred around an observational approach to what the customers or research subjects say or do. It has far less structure to it than the likes of quantitative methods.

Key examples of qualitative research include some observation techniques, focus groups (online included), neuromarketing and projective techniques such as word-association and sentence completion tests.

Benefits of this form of research are it gives the ability to generate new ideas, can help guide future (more structured) research, provide in-depth insights to a problem, view live reactions to new ideas and hear customers opinions first-hand.

Qualitative research can provide the early foundation for setting up more accurate quantitative research.

Each example comes with advantages and disadvantages, but when done correctly, can provide tremendous insights into the customer’s mind which can be the key to solving a problem or identifying an opportunity.


The most common form of this method is a structured list of questions with pre-determined options for selection. We all know this as a survey.

While quantitative methods can also include some observation techniques, the main focus will be placed on surveys to provide some depth.

Key examples of survey methods are the in-home, mall-intercept, telephone, online, drop-off, mail and face-to-face surveys. There are various options when looking to research using this method.

Benefits of quantitative research are determining customer behaviour, providing data for market segmentation, gain data to confirm customer opinions/perceptions and providing general data on a market and customer.

This research methods essentially provides the numbers to marketing research while still allowing specific targeting of who returns feedback in this method when done correctly.

So Which One?

There are a time and place for either or both methods depending on the information required. Large-scale surveys can involve significant cost, in this case, qualitative research should be done first to help guide and improve the accuracy of the quantitative methods.


Hooley, G, Piercy, N, Nicoulaud, B & Rudd, J 2017, Marketing Strategy & Competitive Positioning, 6th Ed., Pearson, Harlow, UK.