XLS Eng

Marketing Analysis Toolkit: Market Size and Market Share Analysis
Harvard Business School Case 510-081

Courseware 9-510-714
This courseware was prepared by Professor Thomas Steenburgh and

Professor Jill Avery, Simmons School of Management, solely as the basis for
class discussion. Cases are not intended to serve as endorsements, sources
of primary data, or illustrations of effective or ineffective management.
Copyright 2010 President and Fellows of Harvard College. This publication
may not be digitized, photocopied, or otherwise reproduced, posted, or
transmitted, without the permission of Harvard Business School.
This toolkit was designed to accompany the Harvard Business School note, No. 9-510-081, entitled "M
Market Size and Market Share Analysis".
Using the Market Size and Market Share Model, Table, and Graph
The prebuilt Market Size and Market Share Excel model calculates market size and market s
upon the formulas and processes discussed above.
There are two sections in the model: an input section and an output section. In the input se
to input your model assumptions, providing values for total consumers in the potential marke
of consumers in three different target markets, the average number of units and price paid b
each of the three target markets, and the number of customers, number of units, and numbe
firms currently selling in the market.
The output section automatically calculates values for you -- do not enter anything into the y
they contain formulas. The output section calculates the market penetration indices, estimat
market size in units and dollars, estimates the size and value of the three target markets, an
customer, unit and dollar shares for three firms in the industry.
Once you become more comfortable with running market size and market share analyses, tr
Excel models.
The spreadsheet entitled Graphs contains graphs which help illustrate what market penetrat
represents. All of the Graphs automatically populate when you enter values in the input sect
model. Do not enter or change anything in the Table or Graph.
Professor Thomas Steenburgh and Professor Jill Avery (Simmons School of Management) developed t
are developed solely as the basis for class discussion and are not intended to serve as endorsements,
or illustrations of effective or ineffective management.
Copyright 2010 President and Fellows of Harvard College. To order copies or request permission to
1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbs
of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitte
means --electronic, mechanical, photocopying, recording or otherwise -- without the permission of Harv
Market Size and
Market Share Analysis
Quantitative Toolkit
ote, No. 9-510-081, entitled "Marketing Analysis Toolkit:
lates market size and market share for you based
output section. In the input section, you need

nsumers in the potential market, the percentage
mber of units and price paid by consumers in
s, number of units, and number of dollars sold by
o not enter anything into the yellow cells as

et penetration indices, estimates the potential
of the three target markets, and calculates
and market share analyses, try building your own
llustrate what market penetration and market share

u enter values in the input section of the Excel
l of Management) developed this toolkit. HBS Toolkits

ed to serve as endorsements, sources of primary data,
opies or request permission to reproduce materials, call

02163, or go to http://www.hbsp.harvard.edu. No part
in a spreadsheet, or transmitted in any form or by any
without the permission of Harvard Business School.
Introduction
First, try completing the sample problem below using pencil and paper. Use the mathemati
Introduction to the toolkit to solve for the answer. Then, try completing the sample probem
In the input section, enter the data contained in the sample problem. Analyze the results th
to see if they match the answer you calculated in the first step. Look at the tables and grap
your results.
Sample Problem
Larson is trying to estimate the market potential for Stacy's Pita Chips. She knows that the
food consumers in the U.S. market. Of these consumers, around 20% are heavy snackers
and 30% are light snackers. Market research shows Larson that heavy snackers purchase
moderate snackers purchase 8 bags of snacks annually, and light snackers purchase 3 bag
on average. Heavy snackers were very price sensitive and waited for sales or used coupon
a bag of snacks. Light snackers were price insensitive and usually paid full price, $4.99, fo
snackers sometimes bought on sale, but sometimes paid full price, so they paid $3.49 for a
Currently, only 20 million snack food consumers purchased pita chips for their snacks. Of t
heavy users, 13 million were moderate users, and 1 million were light users. Three firms cu
in the pita chip segment: Stacy's, which had 10 million consumers who purchased 90 millio
6 million consumers who purchased 63 million units, and Kirkland, which had 4 million cons
million units. In 2008, Stacy's sales were $429 million; Lay's sales were $125 million; and K
$75 million.
How big is the potential market (in consumers, units, and dollars) for salty snacks? What i
pita chips? Based on these answers, how much growth potential is there for a company lik
market penetration of pita chips in the three target markets? Which one offers the most un
Looking at the current market for pita chips, what percentage of the business is driven by h
and light users? Looking across the three target markets, how many units of pita chips do
purchase? How much, on average, does a consumer currently pay for a bag of pita chips?
Calculate the market share of the Stacy's, Lay's, and Kirkland in consumers, units, and dol
How big is their lead?
Solution
Pen and Pencil Solution
First, we will evaluate the market potential. If we want to use the market penetration
make assumptions for) two pieces of data: 1.) the total number of consumers in the
2.) the total number of consumers currently buying in the product category.
The sample problem provides us with the total number of consumers in the potential
The sample problem also provides us with the total number of consumers currently b
So, using the market penetration formula, we can calculate the percentage of potent
buying in the market to assess how much incremental growth is left to capture in the
Market Penetration Index = Market Demand

# of Potential Consumers in the the Market
Hence, only 13% of the potential consumers for pita chips are actually purchasing pi
portion of the potential market available for future growth.
We can then use the same formula to calculate the market penetration indices for ea
markets. First, we need to calculate how many potential consumers there are in eac
multiplying the percentage of consumers in each target market by the total consume
Heavy Users = 0.20 * 150,000,000

Moderate Users = 0.50 * 150,000,000
Light Users = 0.30 * 150,000,000
Then, we use the information given to us in the sample problem on how many consu
currently purchasing to plug these numbers into the market penetration formula to yi
by target market of:
Heavy Users = 6,000,000

30,000,000
Moderate Users = 13,000,000

75,000,000
Light Users = 1,000,000

45,000,000
So, we can see that heavy users are more heavily penentrated than moderate or ligh
untapped, but all three segments have significant room for growth.
We can also use these numbers to help calculate the market penetration in units and
all three target markets. We use the information on the purchasing frequency and av
sample problem to convert number of consumers into units per year and dollars per
Units per Year: Market Potential number of consumers * units c

Heavy Users = 30,000,000 * 21
Moderate Users = 75,000,000 * 8
Light Users = 45,000,000 * 3
Total =
Dollars per Year: Market Potential number of consumers * units c

Heavy Users = 30,000,000 * 21 * $1.99
Moderate Users = 75,000,000 * 8 * $3.49
Light Users = 45,000,000 * 3 * $4.99
Total =
So, the potential market for pita chips is quite large, 1.4 billion bags per year and $4
Units per Year: Current Market number of consumers * units c

Heavy Users = 6,000,000 * 21
Moderate Users = 13,000,000 * 8
Light Users = 1,000,000 * 3
Total =
Dollars per Year: Current Market number of consumers * units c

Heavy Users = 6,000,000 * 21 * $1.99
Moderate Users = 13,000,000 * 8 * $3.49
Light Users = 1,000,000 * 3 * $4.99
Total =
So, the current market for pita chips is 233 million bags per year and $629 million do
Plugging these numbers into the market penetration indices yields:

Unit Market Penetration
Heavy Users = 126,000,000

630,000,000
Moderate Users = 104,000,000

600,000,000
Light Users = 3,000,000

135,000,000
Notice how the consumer, unit, and dollar market penetration rates are all mathemat
Now, we can move on to understanding the current market. The sample problem as
a pita chip consumer purchases and what the average price point paid is. We can u
market to answer this question.
Average # of Units = Total Annual Units

Total Number of Consumers
Average Price Paid = Total Annual Dollars

Total Annual Units
So, on average, across the three segments, consumers purchase 11.65 bags of pita
Using the numbers given to us in the sample problem and the numbers we calculate
each target market is to our business by calculating the target market's share of cons
share formula:
Market Share of Consumers
Heavy Users = 6,000,000 = 30%

20,000,000
Moderate Users = 13,000,000 = 65%

20,000,000
Light Users = 1,000,000 = 5%

20,000,000
So, heavy users account for 30% of the current consumers purchasing, 54% of the c
dollars generated in the pita chip market. Moderate users account for 65% of the cu
current units purchased, and 58% of the current dollars generated. Light users acco
1% of the current units purchased, and 2% of the current dollars generated.
Finally, we can analyze the competitive situation by calculating the market shares of
given to us in the sample problem and plugging it into the market share formula yield
Market Share of Consumers
Stacy's = 10,000,000 = 50%

20,000,000
Lay's = 6,000,000 = 30%

20,000,000
Kirkland = 4,000,000 = 20%

20,000,000
So, Stacy's has 50% of the consumers, 39% share of the units sold, and 68% share
is higher than its unit share, we know that Stacy's price point is higher than the mark
Since Stacy's consumer share is higher than its unit share, we know that people who
average. Looking across the three competitors, Stacy's is the market leader with the
and dollars.
Lay's has 30% of the consumers, 27% of the units, and 20% of the dollars. Since La
know that Lay's price point is lower than the market average.
Kirkland has 20% of the consumers, 34% of the units, and 12% of the dollars. Since
share, we know that Kirkland's price point is lower than the market average. Since L
consumers, we know that people who buy Kirkland buy more units than the market a
So Stacy's has the opportunity to increase frequency of purchase among its current
increased purchase may be Stacy's premium price point.
We can calculate the average quantity purchased for a Stacy's, Lay's, and Kirkland c
This yields:
Stacy's = 90,000,000 =
10,000,000
Lay's = 63,000,000 =
6,000,000
Kirkland = 80,000,000 =
4,000,000
We can calculate the average price paid for a Stacy's, Lay's, and Kirkland product by
This yields:
Stacy's = $ 429,000,000 =
90,000,000
Lay's = $ 125,000,000 =
63,000,000
Kirkland = $ 75,000,000 =
80,000,000
Prebuilt Excel Model Solution

Below is a picture of what the prebuilt model input and output sections should be for
Input Section
Directions: In this section, you must input values to run the model. Values must be inp
that are boxed in blue like this: in order for the model to run. The values
currently are just random numbers. If you are confused about what to enter in each cel
the red celltip for an explanation.
1.) First, enter information about the potential market.
# of consumers in potential market 150,
2.) Second, enter information about the different market segments that exist in the avai
could be heavy users/moderate users/light users or women/men or adults/children or an
purchasing information. These target market consumers represent potential prospects
customers.
percentage of ava
Target Market #1
Target Market #2
Target Market #3
# of consumers in potential market 150,
2.) Second, enter information about the different market segments that exist in the avai
could be heavy users/moderate users/light users or women/men or adults/children or an
purchasing information. These target market consumers represent potential prospects
customers.
percentage of ava
Target Market #1
Target Market #2
Target Market #3
3.) Third, enter information about the consumers who are currently purchasing in the m
that you used above.
# of consumers currently buying in market 20,
# of current consumers average units per

Target Market #1 6,000,000
Fourth, enter information about the firms who are currently serving existing customers i
Firm 1 Firm 2
Units Sold 90,000,000 63,
Dollars Sold $ 429,000,000 $ 125,
# of customers 10,000,000 6,
Output Section
Directions: In this section, the model automatically calculates the various market sizing
calculates contribution margin per unit and total revenue, total costs, and total profit at t
quantity point. Based on your expected unit sales per month input, it calculates how ma
will take you to reach your breakeven quantity. Remember, do not type anything into an
the output section that are filled in yellow like this: as they contain fo
like an explanation of the formula which is being calculated, run your mouse over the re
Market Potential: Available Market Information
Market Penetration Index -- Overall
# of available consumers # of potential units

Target Market #1 30,000,000 630,
Target Market #2 75,000,000 600,
Target Market #3 45,000,000 135,
Total Market Potential 150,000,000 1,365,
Note: The potential units per year and the potential dollars per year figures assume tha
purchase at the same rate and average price as existing customers in the target marke
that all consumers in the available market fall into Target Markets #1, 2, or 3.
Market Penetration Target Market #1

Target Market #2 75,000,000 600,
Target Market #3 45,000,000 135,
Total Market Potential 150,000,000 1,365,
Note: The potential units per year and the potential dollars per year figures assume tha
purchase at the same rate and average price as existing customers in the target marke
Market Performance: Current Market Size
# of customers # of units purchas

Target Market #1 6,000,000 126,
Target Market #2 13,000,000 104,
Target Market #3 1,000,000 3,
Total Market 20,000,000 233,
% of customers % of annual units

Target Market #1 30%
Target Market #3 5%
Total Market 100%
Average Units per Customer
Average Price Paid for units sold $
Market Performance: Current Market Share
share of customers unit market share

Firm #1 50%
Firm #2 30%
Firm #3 20%
Note: These market shares assume that firms #1, 2, 3 are the only firms in the marketp
Professor Thomas Steenburgh and Professor Jill Avery (Simmons School of Management) developed
are developed solely as the basis for class discussion and are not intended to serve as endorsements
1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hb
of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmit
means --electronic, mechanical, photocopying, recording or otherwise -- without the permission of Har
Market Size and
d paper. Use the mathematical formulas summarized in the

mpleting the sample probem using the Prebuilt Excel Model.
blem. Analyze the results that appear in the output section
Look at the tables and graphs that are generated to visualize
Chips. She knows that there are 150 million snack

nd 20% are heavy snackers, 50% are moderate snackers,
at heavy snackers purchase 21 bags of snacks annually,
ght snackers purchase 3 bags of snacks annually,
ted for sales or used coupons so that they paid only $1.99 for
ally paid full price, $4.99, for a bag of snacks. Moderate
ice, so they paid $3.49 for a bag of snacks.
chips for their snacks. Of these, 6 million were

e light users. Three firms currently competed aggressively
ers who purchased 90 million units; Lay's, which had
nd, which had 4 million consumers who purchased 80
les were $125 million; and Kirkland's sales were
rs) for salty snacks? What is the market penetration of

tial is there for a company like Stacy's? What is the
Which one offers the most untapped potential for Stacy's?
f the business is driven by heavy users, moderate users,

many units of pita chips does a consumer, on average,
y pay for a bag of pita chips?
n consumers, units, and dollars. Who is the market leader?

use the market penetration formula, we need to know (or
number of consumers in the potential market, and
product category.
f consumers in the potential market, 150 million.
ber of consumers currently buying, 20 million.
ate the percentage of potential consumers currently

owth is left to capture in the market:
rket Demand = 20,000,000 = 13.3%

mers in the the Market 150,000,000
s are actually purchasing pita chips -- leaving a large
et penetration indices for each of the three target

consumers there are in each target market. We do this by
market by the total consumers in the potential market. This yields:
0 * 150,000,000 = 30,000,000
0 * 150,000,000 = 75,000,000
0 * 150,000,000 = 45,000,000
problem on how many consumers in each target market are

ket penetration formula to yield market penetration indices
= 20.0%
= 17.3%
= 2.2%
ntrated than moderate or light users. Light users seem virtually
arket penetration in units and dollars for the total market and for
purchasing frequency and average price point given to us in the
its per year and dollars per year estimates, as follows:
mber of consumers * units consumed per year

000,000 * 21 = 630,000,000
= 600,000,000
= 135,000,000
1,365,000,000 bags
mber of consumers * units consumed per year * average price paid

000,000 * 21 * $1.99 = $ 1,253,700,000
000,000 * 8 * $3.49 = $ 2,094,000,000
000,000 * 3 * $4.99 = $ 673,650,000
$ 4,021,350,000
billion bags per year and $4 billion dollars.
mber of consumers * units consumed per year

= 126,000,000
= 104,000,000
= 3,000,000
233,000,000 bags
mber of consumers * units consumed per year * average price paid

00,000 * 21 * $1.99 = $ 250,740,000
000,000 * 8 * $3.49 = $ 362,960,000
00,000 * 3 * $4.99 = $ 14,970,000
$ 628,670,000
per year and $629 million dollars.
it Market Penetration Dollar Market Penetration
= 20.0% $ 250,740,000 = 20.0%

$ 1,253,700,000
= 17.3% $ 362,960,000 = 17.3%

$ 2,094,000,000
= 2.2% $ 14,970,000 = 2.2%

$ 673,650,000
ation rates are all mathematically the same!
ket. The sample problem asks us to calculate how many units, on average,
rice point paid is. We can use the totals calculated above for the current
al Annual Units = 233,000,000 = 11.7

al Number of Consumers 20,000,000
al Annual Dollars = $ 628,670,000 = $2.70

al Annual Units 233,000,000
purchase 11.65 bags of pita chips per year and pay $2.70 per bag.
d the numbers we calculated above, we can calculate how important

arget market's share of consumers, units, and dollars. Using the market
Units Dollars
126,000,000 = 54% $ 250,740,000 = 40%

233,000,000 $ 628,670,000
104,000,000 = 45% $ 362,960,000 = 58%

233,000,000 $ 628,670,000
3,000,000 = 1% $ 14,970,000 = 2%
233,000,000 $ 628,670,000
ers purchasing, 54% of the current units purchased, and 40% of the current
rs account for 65% of the current consumers purchasing, 45% of the
generated. Light users account for 5% of the current consumers purchasing,
t dollars generated.
ulating the market shares of the three competitors. Using the information
e market share formula yields:
Units Dollars
90,000,000 = 39% $ 429,000,000 = 68%

233,000,000 $ 629,000,000
63,000,000 = 27% $ 125,000,000 = 20%

233,000,000 $ 629,000,000
80,000,000 = 34% $ 75,000,000 = 12%

233,000,000 $ 629,000,000
e units sold, and 68% share of the dollars sold. Since Stacy's dollar share
point is higher than the market average. Stacy is a premium priced product.
re, we know that people who buy Stacy's buy less units than the market
is the market leader with the dominant market share in consumers, units,
20% of the dollars. Since Lay's dollar share is less than its unit share, we
nd 12% of the dollars. Since Kirkland's dollar share is less than its unit
he market average. Since Lay's unit share is higher than its share of
more units than the market average.
purchase among its current consumers. Part of the stumbling block to
Stacy's, Lay's, and Kirkland consumer by dividing the total units by the total customers.
9 bags per year
11 bags per year
20 bags per year
ay's, and Kirkland product by dividing the total dollars by the total units.
$ 4.77 per bag
$ 1.98 per bag
$ 0.94 per bag
utput sections should be for the solution.
he model. Values must be inputted into all cells

r the model to run. The values that are in the model
about what to enter in each cell, run your mouse over
t 150,000,000
segments that exist in the available market. Market segments

en/men or adults/children or any other group for which you have
represent potential prospects for the product plus existing
percentage of available market

20%
50%
30%
t 150,000,000
segments that exist in the available market. Market segments

en/men or adults/children or any other group for which you have
represent potential prospects for the product plus existing
percentage of available market

20%
50%
30%
currently purchasing in the market. Use the same target markets
20,000,000
s average units per year average price paid

21 $ 1.99
8 $ 3.49
3 $ 4.99
ly serving existing customers in the market.
Firm 2 Firm 3
63,000,000 80,000,000
$ 125,000,000 $ 75,000,000
6,000,000 4,000,000
ates the various market sizing metrics for you. It also

total costs, and total profit at the breakeven
onth input, it calculates how many months it
er, do not type anything into any of the cells in
as they contain formulas. If you would
ed, run your mouse over the red celltip.
13%
ers # of potential units per year # of potential dollars per year

630,000,000 $ 1,253,700,000
600,000,000 $ 2,094,000,000
135,000,000 $ 673,650,000
1,365,000,000 $ 4,021,350,000
rs per year figures assume that potential customers in each target market will
customers in the target market. The total market potential numbers assume
Markets #1, 2, or 3.
20%
600,000,000 $ 2,094,000,000
135,000,000 $ 673,650,000
1,365,000,000 $ 4,021,350,000
rs per year figures assume that potential customers in each target market will
customers in the target market. The total market potential numbers assume
Markets #1, 2, or 3.
20%
17%
2%
# of units purchased per year # of dollars purchased per year

126,000,000 $ 250,740,000
104,000,000 $ 362,960,000
3,000,000 $ 14,970,000
233,000,000 $ 628,670,000
% of annual units % of annual dollars

54% 40%
45% 58%
1% 2%
100% 100%
11.7
$ 2.70
unit market share dollar market share

39% 68%
27% 20%
34% 12%
re the only firms in the marketplace.

of Management) developed this toolkit. HBS Toolkits
d to serve as endorsements, sources of primary data,
pies or request permission to reproduce materials, call

n a spreadsheet, or transmitted in any form or by any
ithout the permission of Harvard Business School.
Input Section
Directions: In this section, you must input values to run the model. Values must be inputte
that are boxed in blue like this: in order for the model to run. The values that ar
currently are just random numbers. If you are confused about what to enter in each cell, ru
the red celltip for an explanation.
1.) First, enter information about the potential market.
# of consumers in potential market 125,000,000
2.) Second, enter information about the different market segments that exist in the potentia
could be heavy users/moderate users/light users or women/men or adults/children or any o
purchasing information. These target market consumers represent potential prospects for t
customers.
percentage of potential ma
3.) Third, enter information about the consumers who are currently purchasing in the marke
that you used above.
# of consumers currently buying in market 6,000,000
# of current consumers average units per year

Target Market #1 1,000,000 12

Fourth, enter information about the firms who are currently serving existing customers
Firm 1 Firm 2
Units Sold 16,000,000 14,000,000
Dollars Sold $ 128,888,888 $ 70,000,000
# of customers 2,000,000 1,000,000
Output Section
Directions: In this section, the model automatically calculates the various market sizing me
calculates the market potential. The second section calculates the current market size. Th
the current market shares of three firms. Remember, do not type anything into any of the c
are filled in yellow like this: as they contain formulas. If you would like an e
being calculated, run your mouse over the red celltip.
Market Potential: Available Market Information
Market Penetration Index -- Overall 5%
# of potential consumers # of potential units per year

Target Market #1 37,500,000 450,000,000
Target Market #2 25,000,000 175,000,000
Target Market #3 62,500,000 187,500,000
Total Market Potential 125,000,000 812,500,000
Note: The potential units per year and the potential dollars per year figures assume that po
purchase at the same rate and average price as existing customers in the target market. T
Market Penetration Target Market #1 3%
Market Performance: Current Market Size

# of customers # of units purchased per ye
Target Market #1 1,000,000 12,000,000
Target Market #2 3,000,000 21,000,000
Target Market #3 2,000,000 6,000,000
Total Market 6,000,000 39,000,000
% of customers % of annual units

Target Market #1 17% 31%
Total Market 100% 100%
Average Units per Customer 6.5
Average Price Paid for units sold $ 7.22
Market Performance: Current Market Share

Firm #1 33% 41%
Firm #2 17% 36%
Firm #3 50% 23%
Note: These market shares assume that firms #1, 2, 3 are the only firms in the marketplace
Analyzing Your Results

Now that you have calculated the size of the potential market, the size of the current marke
currently selling to customers in the market, it is time to analyze your results.
First, take a look at the potential market. How large is it? How profitable is it? How well pe
target markets make up the majority of the unit volume? Of the dollar volume? Which targ
for growth based on their current market penetration indices? Overall markets and target m
may not offer a lot of room for growth -- this indicates that most of the consumers in the pot
product. Marketers facing high penetration rates have to focus their marketing strategies o
market share from other firms currently selling in the market. Overall markets and target m
may offer significant room for growth -- this indicates that most of the consumers in the pote
the product. Marketers facing low penetration rates have to focus their marketing strategie
This may require raising awareness of the need that the product fills, raising awareness tha
the roadblocks which are preventing customers from purchasing and helping customers ove
Then, take a look at the current market. Who has the bulk of the unit share, dollar share an
contributing to these firms' success? How many units are customers currently buying in a y
increase this by increasing the frequency with which customers buy or by increasing the qu
is the average price point customers are paying? Is this maximizing the firm's profitability?
that each target market is providing. This provides insight on how to allocate marketing spe
if a target market is contributing 30% of the dollars, then perhaps you should allocate 30%
market. If a target market is underpenetrated, then perhaps you should allocate more mark
on its potential growth.
Visualizing Your Results

Use the Table and Graph on the next spreadsheet to help you visualize your results.
Market Size and
l. Values must be inputted into all cells

to run. The values that are in the model
at to enter in each cell, run your mouse over
125,000,000
s that exist in the potential market. Market segments

or adults/children or any other group for which you have
nt potential prospects for the product plus existing
ercentage of potential market

30%
20%
50%
y purchasing in the market. Use the same target markets
6,000,000
verage units per year average price paid

12 $ 8.99
7 $ 5.99
3 $ 7.99
g existing customers in the market.
irm 2 Firm 3
14,000,000 9,000,000
$ 70,000,000 $ 54,000,000
1,000,000 3,000,000
various market sizing metrics for you. The first section

e current market size. The third section calculates
anything into any of the cells in the output section that
as. If you would like an explanation of the formula which is
5%
of potential units per year # of potential dollars per year

450,000,000 $ 4,045,500,000
175,000,000 $ 1,048,250,000
187,500,000 $ 1,498,125,000
812,500,000 $ 6,591,875,000
ear figures assume that potential customers in each target market will
ers in the target market. The total market potential numbers assume
#1, 2, or 3.
3%
12%
3%
of units purchased per year # of dollars purchased per year
12,000,000 $ 107,880,000
21,000,000 $ 125,790,000
6,000,000 $ 47,940,000
39,000,000 $ 281,610,000
% of annual units % of annual dollars

31% 38%
54% 45%
15% 17%
100% 100%
6.5
$ 7.22
nit market share dollar market share

41% 51%
36% 28%
23% 21%
ly firms in the marketplace.
e size of the current market, and the market shares of firms
ofitable is it? How well penetrated is it currently? Which

ollar volume? Which target markets offer the best opportunities
erall markets and target markets which have high penetration rates
the consumers in the potential market are already buying the
eir marketing strategies on stealing customers and
erall markets and target markets which have low penetration rates
the consumers in the potential market are not currently buying
s their marketing strategies on persuading new customers to buy.
ills, raising awareness that the product exists, or understanding
and helping customers overcome them.
unit share, dollar share and/or share of customers? What is

mers currently buying in a year? Is there an opportunity to
uy or by increasing the quantity customers buy and use? What
ng the firm's profitability? Analyze the contribution to the total
w to allocate marketing spending across target markets. For example,
you should allocate 30% of the marketing spending to that target
should allocate more marketing spending to it in order to capitalize
ualize your results.
Management) developed this toolkit. HBS Toolkits

to serve as endorsements, sources of primary data,
es or request permission to reproduce materials, call

a spreadsheet, or transmitted in any form or by any
hout the permission of Harvard Business School.
Market Potential Graphs
These graphs automatically populate based on the values you entered into the Excel mode
market penetration of the total market and of each of the three target markets.
Customers
Current Potential
Target Market #1 1,000,000 37,500,000 36,500,000
Target Market #2 3,000,000 25,000,000 22,000,000
Target Market #3 2,000,000 62,500,000 60,500,000
Total 6,000,000 125,000,000 119,000,000
Market Penetration: Customers
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Target Market #1 Target Market #2 Target Market #3
Market Penetration: Units
100%
90%
80%
70%
60%
50%
40%
30%
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Market Penetration: Dollars
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
Market Share Graphs

These graphs automatically populate based on the values you entered into the Excel mode
market shares of the three firms currently serving the market.

Firm #1 33% 41%
Firm #2 17% 36%
Firm #3 50% 23%
Share of Customers
33%
50%
Share of Customers
33%
50%
17%
Unit Share
23%
41%
36%
Dollar Share
21%
51%
28%
Market Share
Market Size Analysis
ues you entered into the Excel model. They show you the
e three target markets.
Units Dollars
Current Potential Current Potential
12,000,000 450,000,000 438,000,000 $ 107,880,000 $ 4,045,500,000 3,937,620,000
21,000,000 175,000,000 154,000,000 $ 125,790,000 $ 1,048,250,000 922,460,000
6,000,000 187,500,000 181,500,000 $ 47,940,000 $ 1,498,125,000 1,450,185,000
39,000,000 812,500,000 773,500,000 $ 281,610,000 $ 6,591,875,000 6,310,265,000
ket Penetration: Customers
Market Potential
Market Penetration
et #2 Target Market #3 Total
Market Potential
Market Penetration
Market Potential
Market Penetration
arket Penetration: Dollars
Market Potential
Market Penetration
ues you entered into the Excel model. They show you the
t market share dollar market share

41% 51%
36% 28%
23% 21%
hare of Customers
33% Firm #1
Firm #2
Firm #3
hare of Customers
33% Firm #1
Firm #2
Firm #3
17%
Unit Share
%
Firm #1
41%
Firm #2
Firm #3
6%
Dollar Share
%
Firm #1
51% Firm #2
% Firm #3
School of Management) developed this toolkit. HBS Toolkits
intended to serve as endorsements, sources of primary data,
rder copies or request permission to reproduce materials, call

on, MA 02163, or go to http://www.hbsp.harvard.edu. No part
, used in a spreadsheet, or transmitted in any form or by any
wise -- without the permission of Harvard Business School.
Introduction
Strong marketers combine creative thinking with rigorous quantitative analysis to make comp
These online quantitative toolkits were designed to help facilitate the quantitative analyses th
marketing decision making. There are five toolkits, each focusing on a particular type of qua
Situation Analysis
Breakeven Analysis
Customer Lifetime Value Analysis
Market Size and Market Share Analysis
Pricing and Profitability Analysis
Toolkit Contents
Each toolkit contains an Introduction which explains the analytical concept, explores how it
making, and shows in words, mathematical formulas, and concrete examples how to calcula
should carefully review the Introduction so that you are familiar with the analysis, how it is ca
when it is used in marketing. The Introduction is contained in the first spreadsheet within the
The second spreadsheet within each toolkit contains a Sample Problem, which guides you
concept, shows you the solution using pen and paper methods, and then shows you how to
Excel model to yield the solution.
Once you have grasped the analytical concept, you are ready to explore the
accompany each toolkit. These models are designed to do the calculations for you. Each m
In the Input Section, you will need to input various pieces of data to be analyzed.
put into each of the cells in the Input Section in order for the model to run. For ex
be asked to input the price of the product, the variable costs of the product, the fix
the acquisition cost of a customer, the total number of customer in a market, etc.
model's "assumptions" which drive the calculations and are usually found in the ca
Once all of the input values are inputted, the model is ready to go to work. Prebu
Output Section automatically calculate key components of the quantitative analy
of the output sections calculate Total Revenue, Total Costs, and Total Profits. Eac
Sections calculates the final answer; for example, the Breakeven Analysis toolkit's
breakeven quantity, the Customer Lifetime Value Analysis toolkits' model calculate
It is important that you do not enter values into the Output Section of the model, a
formulas that run the analysis. Cells containing prebuilt formulas are colored ye
always avoid changing anything in a yellow cell.
Note: the values contained in the Excel model Input Section are random values. You should
before using the tool to solve a problem.
The Prebuilt Excel Spreadsheet Models are contained in the third spreadsheet within the too
Some of the toolkits contain Graphs and Tables which help illuminate the analytical concep
your answers in context. The Graphs and Tables automatically create themselves once data
You should avoid entering anything into the Graphs and Tables spreadsheet, as this may ove
that create the Graphs and Tables. The Graphs and Tables spreadsheets are contained in th
Excel Spreadsheet Models within the toolkit.
The final spreadsheet in each toolkit is this Toolkit Help page. You may refer to this guide if
understanding how to use the toolkit.
Using the Toolkits

Each of the Prebuilt Excel Spreadsheet Models is built in Excel, so you need to be familiar a
beginning to use the toolkits. The basic Excel operations that are needed to use the toolkits
are not familiar with these operations, you should use the Help tab in your Excel software to
File Open and Save

You can download the toolkits directly into Excel.
Important Note: All of the toolkits contain a prebuilt Excel model. Any changes you make to
once you save the file. To maintain the integrity of the prebuilt model, save the toolkit to you
are ready to run an analysis, open the toolkit file and immediately save it with another name
calculate your results.
Using Multiple Spreadsheets within a File

Each toolkit contains multiple spreadsheets within it, as outlined above. You can switch betw
clicking on the appropriate spreadsheet on the bottom left hand side of the screen.
Entering Values into Cells

In the Input Sections of the toolkits, you will be asked to enter values in various cells. These
in the model calculations.
Using Cell References and Formulas

The Excel spreadsheet models in the toolkits are prebuilt, which means you do not need to w
yourself; however, you should familiarize yourself with the formulas that are in the cells in the
so that you can create your own spreadsheet models and customize the analysis, as needed
Print
The Output Section, graphs, and tables can be printed by highlighting the desired print area.
Getting Help while in the Toolkit Models

Each Prebuilt Excel Model features red celltip markers which contains information on what to
and/or what the formula in the cell is calculating. These can help guide you through the tool.
information, place your mouse over the red celltip located on the top right hand corner of a c
The red celltip marker looks like this (see below); run your mouse over it to see how it works
Professor Thomas Steenburgh and Professor Jill Avery (Simmons School of Management) developed t
are developed solely as the basis for class discussion and are not intended to serve as endorsements,
1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbs
of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitte
means --electronic, mechanical, photocopying, recording or otherwise -- without the permission of Harv
How-To Guide
ntitative analysis to make competent marketing decisions.
ate the quantitative analyses that you will use to guide your
sing on a particular type of quantitative analysis:
ytical concept, explores how it is used in marketing decision

crete examples how to calculate the answer. To begin, you
r with the analysis, how it is calculated, and how and
the first spreadsheet within the toolkit.
e Problem, which guides you through the analytical

s, and then shows you how to populate the prebuilt
to explore the Prebuilt Excel Spreadsheet Models which

e calculations for you. Each model contains two sections:
pieces of data to be analyzed. Values must be

er for the model to run. For example, you may
ble costs of the product, the fixed costs of the product,
of customer in a market, etc. These values are the
and are usually found in the case exhibits or text.
is ready to go to work. Prebuilt formulas in the

nents of the quantitative analysis. For example, some
al Costs, and Total Profits. Each of the models' Output
he Breakeven Analysis toolkit's model calculates the
nalysis toolkits' model calculates the CLV of a customer.
Output Section of the model, as this may overwrite
built formulas are colored yellow; you should
are random values. You should change these values
hird spreadsheet within the toolkit.
uminate the analytical concept and help you visualize

y create themselves once data is inputted into the Input Section.
s spreadsheet, as this may overwrite necessary formulas
preadsheets are contained in the spreadsheet after the Prebuilt
. You may refer to this guide if you are having trouble
el, so you need to be familiar and facile with Excel before

are needed to use the toolkits are as follows; if you
p tab in your Excel software to learn how to do them.
el. Any changes you make to the file are permanent

model, save the toolkit to your desktop. Then, when you
tely save it with another name so that you can
ed above. You can switch between the spreadsheets by

d side of the screen.
values in various cells. These inputs will be used
ch means you do not need to write Excel formulas

mulas that are in the cells in the Output Section
tomize the analysis, as needed.
hlighting the desired print area.

contains information on what to enter into each cell
elp guide you through the tool. To access the helpful
he top right hand corner of a cell.
use over it to see how it works.
l of Management) developed this toolkit. HBS Toolkits

ed to serve as endorsements, sources of primary data,
opies or request permission to reproduce materials, call

in a spreadsheet, or transmitted in any form or by any
without the permission of Harvard Business School.

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Marketing Analysis Toolkit: Market Size and Market Share Analysis

Harvard Business School Case 510-081

This courseware was prepared by Professor Thomas Steenburgh and

ote, No. 9-510-081, entitled "Marketing Analysis Toolkit:

lates market size and market share for you based

output section. In the input section, you need

o not enter anything into the yellow cells as

and market share analyses, try building your own

llustrate what market penetration and market share

l of Management) developed this toolkit. HBS Toolkits

opies or request permission to reproduce materials, call

Market Penetration Index = Market Demand

Heavy Users = 0.20 * 150,000,000

Heavy Users = 6,000,000

Moderate Users = 13,000,000

Light Users = 1,000,000

Units per Year: Market Potential number of consumers * units c

Dollars per Year: Market Potential number of consumers * units c

Units per Year: Current Market number of consumers * units c

Dollars per Year: Current Market number of consumers * units c

Plugging these numbers into the market penetration indices yields:

Heavy Users = 126,000,000

Moderate Users = 104,000,000

Light Users = 3,000,000

Average # of Units = Total Annual Units

Average Price Paid = Total Annual Dollars

Market Share of Consumers

Heavy Users = 6,000,000 = 30%

Moderate Users = 13,000,000 = 65%

Light Users = 1,000,000 = 5%

Market Share of Consumers

Stacy's = 10,000,000 = 50%

Lay's = 6,000,000 = 30%

Kirkland = 4,000,000 = 20%

Prebuilt Excel Model Solution

1.) First, enter information about the potential market.

# of consumers in potential market 150,

# of consumers currently buying in market 20,

# of current consumers average units per

Target Market #2 13,000,000

Target Market #3 1,000,000

Dollars Sold $ 429,000,000 $ 125,

Market Potential: Available Market Information

Market Penetration Index -- Overall

# of available consumers # of potential units

Target Market #2 75,000,000 600,

Target Market #3 45,000,000 135,

Total Market Potential 150,000,000 1,365,

Market Penetration Target Market #1

Target Market #3 45,000,000 135,

Total Market Potential 150,000,000 1,365,

Market Penetration Target Market #1

Market Penetration Target Market #2

Market Penetration Target Market #3

Market Performance: Current Market Size

# of customers # of units purchas

Target Market #2 13,000,000 104,

Target Market #3 1,000,000 3,

Total Market 20,000,000 233,

% of customers % of annual units

Target Market #2 65%

Total Market 100%

Average Units per Customer