Market Share?

[mandino]

Just joined the site. Some great stuff going on in here.

I was reading that many of you talk about your market share in your area. I was wondering how you found that out. I am in a large area - city of $200,000 +. I am the only place withing .5 mile, but there are 4 chains and 4 independants within 3-5 miles of me.

We’ve been open 10 months, and doing fairly well, but I have no idea what the other places are doing or how I would calculate my market share without knowing that?

Just wondering how you all figured market share?

Thanks.

 

[ADpizzaguy]

I don’t know for sure, but you would probably would have to have the sales figures of your competition. seems logical.

 

[system]

To keep it simple, let’s say there are 100 homes in your target area (usually x mile radius around your store). If you have 50 customers, you have 50% market share. If you have 25 customers, you have 25% market share.

 

[j_r0kk]

I use the tommieknowspizza approach. He stated in a few of his posts that the average household (not person) will spend $20/month on pizza (after researching for a couple hours, the total is actually closer to $17.45 per household per month). I take my total households, multiply by $20 and that will give me the total pizza sales in my market. I take my sales and divide by a percentage of the total market to give me my marketshare. Here’s an example:

20,000 households x $20 = $400,000/month in pizza revenue.

Your store: $40,000/month

$40,000 / $400,000 = 10% marketshare

-J_r0kk

 

[pizzaguy]

j_r0kk:

I use the tommieknowspizza approach. He stated in a few of his posts that the average household (not person) will spend $20/month on pizza (after researching for a couple hourse, the total is actually closer to $17.45 per household per month). I take my total households, multiply by $20 and that will give me the total pizza sales in my market. I take my sales and divide by a percentage of the total market to give me my marketshare. Here’s an example:

20,000 households x $20 = $400,000/month in pizza revenue.

Your store: $40,000/month

$40,000 / $400,000 = 10% marketshare

-J_r0kk

Ok every market is a bit different so Instead of the 17.45 per house hold that you are talking about would it be safe to say I could use our stores average ticket to figure out our market share or are your numbers a national average that would give me a clearer picture?

 

[j_r0kk]

pizzaguy,

These numbers are pulled straight from the National Restaurant Association website. You’ve just got to get a calculator out to break it down to pizza sales per household. This is a national average.

Take the total households in your market.
Multiply by $17.45 (let’s say the answer is “Z”)
Your monthly sales divided by “Z” as a percent
This is your marketshare.

-J_r0kk

 

[pizzaguy]

If I use the numbers you have given for the avg ticket I get 55% If I use my ticket average I get 45.2%. Do you know what the avg market share is nationaly?

 

[j_r0kk]

pizzaguy,

These numbers have nothing to do with avg. ticket. The $17.45 number I’ve given is the amount of money the average household spends on pizza purchases in a month. It’s NOT the average ticket price. Follow this formula:

…Your total households in your market: ________________

… X $17.45

Total pizza sales per month in your market = ________________

Your pizza sales per month …= ________________

Divide your pizza sales per month by total pizza sales in your market, as a percent. That’s your marketshare.

Marketshare - The percentage of sales you capture per month in your town versus your competition. -J_r0kk

 

[pizzaguy]

j_r0kk:

pizzaguy,

These numbers have nothing to do with avg. ticket. The $17.45 number I’ve given is the amount of money the average household spends on pizza purchases in a month. It’s NOT the average ticket price. Follow this formula:

…Your total households in your market: ________________

… X $17.45

Total pizza sales per month in your market = ________________

Your pizza sales per month …= ________________

Divide your pizza sales per month by total pizza sales in your market, as a percent. That’s your marketshare.

Marketshare - The percentage of sales you capture per month in your town versus your competition. -J_r0kk

I guess at 1:30 in the morning after a 12 hour day my brain gets foggy lol So what is the 17.45? Is that not what the average house spends on pizza an average of once every month? If so Would that not be the Average ticket for a national Family every month? Does that make any sense?

 

[j_r0kk]

Sure. Scenario-wise, if the average family only orders once per month you’re right on. -J_r0kk

 

[j_r0kk]

BTW, if you’re at 55% marketshare you’re frigging smokin’! Even if you’re in a town with only 5,000 addresses you’re at $12k/wk. That’s awesome.

pizzaguy = 55%

everybody else = scrounge for the other 45% (aka crumbs)

 

[pizzaguy]

OK so I am not going crazy with my thinking lol!

So do you know what the average pizza shop would have for a market share? My 55% seems high.

 

[paul7979]

Mandino
I’ll go out on a limb here and I’m sure I’ll piss jrokk and a few others off. Who cares about market share!!! If you are doing sales that make you an acceptable amount of money, and you are constantly increasing your sales, and hence your profits, what does it matter what the competition is doing.
For that matter who is your competition? Is it the Dominos around the corner, or maybe the Stop and Shop grocery store next door? How about McDonalds or Outback Steakhouse?
I for one will be the first to say stop looking for that warm fuzzy feeling you get by knowing you are getting closer towards beating your competition and start looking for ways to grow the whole pizza market in your town. I would much rather have a 10% market share of a $200,000/week market than a 15% market share of a $100,000 market. I truly believe that until you realize that you are competeing against grocery stores, fast food, sit down restaurants ect ect, you will always have too narrow of a focus to start growing your sales to their maximum potential.

 

[mandino]

Thanks all.

The calc. on market share makes sense, I’ll have to run the numbers.

Paul 7979,
I agree 100%. I am in an incredibly busy shopping center, and we do dine in, carry out, and delivery. We compete with approx. 50 other restaurants (and mostly chains) within a 3 miles radius for dine in and carry out business, and 8 pizza places for delivery business.

You are right, it’s not about beating the competition, because in a market like this, I will never be the only restaurant. It’s about getting people to choose me for lunch or dinner over their million other options, and that’s it. Because we’re all here to make money, plain and simple.

I was curious as to how they were computing market share without knowing everyone else’s sales. Everything posted makes perfect sense.

Thanks.

 

[NicksPizza]

paul7979:

Mandino
I’ll go out on a limb here and I’m sure I’ll piss jrokk and a few others off. Who cares about market share!!! If you are doing sales that make you an acceptable amount of money, and you are constantly increasing your sales, and hence your profits, what does it matter what the competition is doing.

It makes a real difference in terms of marketing strategy, I believe. IF I am the only store in my market, and pulling in 62% of available market, then I have a different strategy than if I am at 30% or even 90%. If I have 10% of a 400,000 market potential with only 2 other pizza competitors, then I have a golden opportunity to grab more market. If I have 70% of that same market, then I need to concentrate effort on building as well as maintaing my position against the sompetitors.

Market share and position don’t change the need for marketing and business growth . . . just offer a differnet tool in determining priorities and perspective. It ain’t a single magic bullet for success, but sure offers a useful additional piece of the picture.

 

[j_r0kk]

paul7979 writes:

Mandino
I’ll go out on a limb here and I’m sure I’ll piss jrokk and a few others off. Who cares about market share!!! If you are doing sales that make you an acceptable amount of money, and you are constantly increasing your sales, and hence your profits, what does it matter what the competition is doing.

Nah, doesn’t piss me off, LOL. I just have a different perspective. I like to calculate marketshare and measure my store versus others. Why? Well, for one, I LOVE the spirit of competition and encourage it. Also, it’s a good measuring stick for my store’s performance versus all the others. If I’ve got a market of $262,000 a month and I capture 26%, I know I’m doing well but there’s always room to capture more customers from my competitors. It’s just a different philosophy. -J_r0kk

 

[pizzaguy]

Got the numbers from my post office today and figured out I am at 51.5% So I am doing allright. I just need to get them to spend more and order more often.

 

[NicksPizza]

Sounds like an excellent use of the Market Share information. Your finding is an example of what I see as useful for this measure.

You know you have a bunch of people, and can make use of upselling as a strategy for a while . . . and can target soupons or specials to those established customers.

I have about 65% of marketshare in a town with a LARGE senior citizen and fixed income population. I’m looking to target repeat sales, upselling and customer rewards for loyalty. Maintain and build from within this quarter and keep the hooks out for new customers moving into town.

 

[system]

Nick, do you offer a senior citizen discount? If not, 10% goes a long way! Or, when you have your dining room ready, offer them free coffee.

 

[PizzaCity]

This was a great read for me! We go back and forth on whether or not we can survive this business in the long haul but after reading this and running our numbers, we discovered we’re only at 5.9% market share. Even our “boy it would be unbelievable to do $$” number would only be 10.7%. It makes the long term goals seem achievable.