Page 73 - Duct Tape Marketing

57Chapter 4: Sizing Up Competitors and Staking Out Market Share

ߜ Product-oriented targeting: Sometimes the most effective way to mea-
sure the size of your target market is through an analysis of how many
sales of products like yours are taking place. For instance, a microbrew-
ery might measure its share of the market as a percentage of all premium
beer sold in its geographic target area. (The microbrewery wouldn’t try
to measure its sales against all beer sales but rather it would focus on
premium beer sales, because that is the microbrewery’s sphere of busi-
ness influence.) Likewise, an attorney specializing in land-use planning
would assess the number of land-use cases in his statewide area before
trying to calculate market share.

Doing the math

Once you have a good sense of the size of your total target market, you can
use several approaches to calculate your share.

ߜ Unit sales: Some businesses can easily figure out the total number of
products like theirs sold each year. A motel manager, for instance, could
estimate the size of the target market by multiplying the number of motel
rooms that exist in the target market area by the region’s approximate
occupancy rate. If there are 2,000 rooms and a 75-percent occupancy
rate, then the market area experiences rental of 547,500 room rentals a
year. If the motel manager knows that her 100-room motel books 24,000
room rentals a year, she can figure that her share of local market motel
business is approximately 4.5 percent.

A real estate agent may do a similar calculation, checking assessor office
records to determine the total number of residential house sales over
the previous year and comparing that total figure with the number of
houses the agent sold personally.

ߜ The number of potential customers: If you know that 30,000 adults are
in your target market area, and if you can make an educated guess that
one in ten of them — or 10 percent of the total — is a consumer of serv-
ices like yours, you can assume that your business has a total potential
market of 3,000 adults. If you’re serving 300 of those adults, then you
have a 10-percent share of your target market.

To aid in your guesswork, visit the reference area of your local library
and flip through the Standard Rate and Data Service (SRDS) Lifestyle
Market Analyst to learn valuable information about consumers in your
market area.