Understanding how share of voice and market share relate to each other can help retailers make better sense of their numbers.
Make Your Market Share Add Up
A study commissioned by the IPA in 2009 looked at the way dominating share of voice might affect brand growth. It found that for a sample of 123 FMCG brands, for every 10 points that share of voice exceeded market share, the brand could expect to see market share grow by 0.5%. Ohal, a global marketing effectiveness consultancy, recently took another look at the numbers and it seemed like a good time to refocus the analysis towards UK retailers.
Taking two examples from Ohal’s library of case studies, what sort of relationship can we find between the two? And what does it mean for your brand? The evidence to support the idea that share of voice and market share are so closely aligned is mixed.
For the retailer shown in chart 1, market share has increased each year. Until the last year, share of spend has been high, indicating that improvements in market share would be expected. The most interesting point is the final one, where share of spend is at its lowest point and is below market share too. The theory would suggest a corresponding decline in market share in 2014.
For the retailer in chart 2, the evidence is far less clear. Market share is going backwards even as share of spend rises. Retailing is obviously more complex than looking at specific FMCG case studies. While we may now be entering a period of Make your market share add up Understanding how share of voice and market share relate to each other can help retailers make better sense of their numbers slow recovery, the make-up of the sector has changed dramatically over the last four years. We have seen market consolidation; the disappearance of a number of wellknown high street brands; the expansion of traditional retailers into ecommerce, as well as the emergence of pure-play etailers.
And this completely ignores pricing strategies and how these vary between recession, recovery and growth phases. These and many more factors can confound the measurement of how brand investment affects both market share and long-term business success.
To find out how bespoke econometric analysis can help you understand the impact of marketing activities, please contact: Jon Webb, deputy managing director, Ohal, at firstname.lastname@example.org, or call 020 8318 7321.