Market share numbers from the market research analysts can provide interesting insights into the direction a market is going. However, relying on the numbers alone without understanding how they are created or the assumptions that went into their research can lead to the wrong conclusions
There are a variety of common mistakes that market research consumers make. Consumers of market share numbers need to be aware of these types of mistakes and work to avoid them including:
- Not distinguishing between the date of publication and the period covered
- Not understanding the difference between historical “market share” numbers with winners and losers and “forecast” research that quantifies market direction
- Using old, “out-of-date” data
- Not “peeling the onion” to understand how the numbers were created
- Using market share numbers out-of-context
- Using generic numbers
- Using market share numbers developed using a mix of audited and un-audited numbers
- Confusing growth with market share
- Using market share numbers from the wrong type of analyst
- Not talking to the analysts
SageCircle Technique: The basic recommendation for research consumers is to take everything with a grain of salt. The best tool consumers can utilize for increasing the usefulness of market share numbers is to ask market researchers questions. The following is a checklist of questions to ask market researchers:
- What is your market taxonomy with supporting definitions?
- How did you verify the vendor-supplied numbers?
- Do you footnote whether the numbers came from an audited or unaudited source?
- Do you footnote differences in the definitions of numbers provided by the vendors?
- How do you handle a situation when a vendor does not supply numbers?
- Who collects the data, a senior analyst or a research operations staff?
- If research operations, how was the staff trained?
Bottom Line: As with other types of analyst information, users of market share numbers should strive to be informed consumers of analyst research. The best results are obtained by the having a relationship with the market researcher and using that relationship to obtain insights into the quality of the numbers.
Consumers should be aggressive in challenging analyst positions and asking for background information on how they developed their numbers.
Question: Research consumers – Do you peel the onion with market researcher to understand the underlying models and methodologies? If not, why?
Are you getting full value from your contracts with the analyst firms? SageCircle can help. Our strategists can:
- Assist in creating analyst firm contract goals and objectives
- Help you establish a realistic firm checklist
- Determine the best ways to negotiate contact value.
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