Concerns about market share measurement are pertinent, especially in an industry as complex and data driven as equipment sales.
While researching this article, I read many definitions of market share. The definition below is representative of those I read:
“Market share, in strategic management and marketing, is the percentage or proportion of the total available market or market segment that is being serviced by a company. It can be expressed as a company’s sales revenue (from that market) divided by the total sales revenue available in that market. It can also be expressed as a company’s unit sales volume (in a market) divided by the total volume of units sold in that market.”
It is evident that the common thread in these definitions is the word total. The definition of market share as a percentage of the total market can be vague, especially when the “total” is not clearly defined or when all players do not report their sales figures. As dealers are being rated, graded, pressured, and, in some instances, terminated due to lack of market share, it’s crucial that the manner in which this measurement is determined is widely known and agreed upon. This is where industry-wide standards and transparency play a pivotal role. Having a common platform or agreed-upon methodology for reporting sales and calculating market share can provide a sense of reassurance and confidence in the market share system.
For the sake of argument, would you agree that if some are affecting the market that do not “report” their numbers for market share calculations, these folks should be widely known? And, if it is the case that several are not participating or if a few are selling many measurable units in particular areas, wouldn’t this fact, in the least, distort and, in the most, make market share numbers meaningless? If certain players are not reporting their sales figures, their impact on market share is unaccounted for, potentially distorting the results.
“As I see it, it would be beneficial to identify and disclose which entities are not participating in the reporting system. This transparency could help in understanding the limitations and potential inaccuracies in market share calculations.” — Kim Rominger | CEO, NAEDA
Consider the Implications
How can someone’s lifelong work and investment be taken away due to what could be an inaccurate measurement? As I see it, it would be beneficial to identify and disclose which entities are not participating in the reporting system. This transparency could help in understanding the limitations and potential inaccuracies in market share calculations.
Standardized Reporting
All dealers and manufacturers should follow a consistent format for reporting sales data, including unit sales and revenue.
Comprehensive Data Collection
The industry should work towards collecting data from all players, including those who might not traditionally report their figures. This comprehensive data collection is not just a necessity but a means to ensure that all players are accounted for, making you feel secure and well-informed about the market dynamics.
This transparency is not just a request, it’s your right to have accurate information to justify the numbers presented. It would also allow for better auditing of numbers if there were a dispute without causing major work for the party questioning the numbers. In the days of precision technology, we have the means to precisely track new equipment (at least on larger units, with more units coming online every day), which is essential for accurate market share calculations. We need to continue leveraging technology to enhance data accuracy and availability, fostering an optimistic and forward-thinking approach to measuring market share in the industry.
Kim Rominger is CEO of the North American Equipment Dealer Association (NAEDA).
