BCG Matrix Formulas
This article details the formulas and calculations required to construct the BCG matrix, namely Relative Market Share and Market Growth Rate.
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Market Share in the BCG Matrix
For those people familiar with the BCG matrix, you should recall that the horizontal axis measures relative market share. And this factor is the more important of the two dimensions in the model.
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Variations of Market Share
It would be a mistake for a firm to rely upon one market share measure only. Assuming that the firm has access to competitive sales information, then a variety of market share metrics should be calculated and reviewed.
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Examples for Calculating Market Shares
Market share is an easy metric to calculate provided you have access to unit and revenue sales. Here are some examples, and grab the free market shares Excel template as well.
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Price Premium Index
Price premium refers to the brand’s price to the consumer relative to a key competitors price or relative to the average price charged in the marketplace. There are two ways to calculate price premium, depending upon whether or not we have access to market share information.
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Decomposing Market Share
Did you know that market share is made up of three underlying components? The factors are share of customer, penetration share and usage index. Find out more!
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Market Shares: Overview and Formulas
Market share is a measure of how the brand/firm is performing relative to its competition.
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Available versus unavailable consumers
Firms will often have the goal of increasing market share. Increased market share is primarily delivered through winning a greater proportion of the market’s business. In particular, one or more of the following situations must occur for a firm/brand to increase its market share:A greater proportion of consumers decide to purchase the brandThe brand wins
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How to decompose market share: VIDEO
Market share can be decomposed into three components, namely:Penetration ShareShare of CustomerUsage IndexThe following video explains how these three components work together to calculate overall market share.
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Advertising awareness and recall metrics
Advertising awareness metricsIn addition to measuring brand awareness, firms will often look to measure advertising awareness through a similar/same survey of the target market. This would be an extension of the questionnaire discussed in the article on brand awareness metrics.There are four main advertising awareness metrics that can be measured through a questionnaire, namely;unprompted advertising
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