I came across a case in which I was given the market size, competitor shares, price of client's product, cost of client's product, a few product features, and asked to calculate the market share and price potential in 5 years. In such a question, should I make a best guess based on market concentration, product features, price, etc.? Is there any other method to calculate it? And would there be an exact answer to this question?
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How to calculate expected market share if only overall market size, price, cost, and product information are given?
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Hi there,
Yes! This is looking to see whether you can make reasonable assumptions/estimates.
To me, the key here tends to be in the product features.
With these types of cases, you often receive information on how your features stack up against the competition (and possibly information on customer preferences).
You need to basically say "ok, how much better is my product compared to competition?" You also need to consider how many competitors there are.
So, if there are six competitors and your product is average, you can assume ~16% market share. However, if your product is #1, then you could get between twice and much and 50% of the market share (i.e. 32-50%).
^This is just an example, but if you provide us the numbers we can help you come up with reasonable #s (and, most importantly, talk through the reasoning)
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To add on Ian's answer - please be aware that there are no "right" answers or results here! This is a way to test your ability to infer a reasonable expectation from a set of base metrics, combined with the ability to clearly articulate the underlying logic of your projection.
Cheers, Sidi
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Hello!
You need to make estimations, or "educated guesses".
Key here is to analyze the PRODUCT and the CLIENT, to see the value proposition of each of the players, and how this matches to the different clients (from now and in 5 years, since they evolve).
Hope it helps!
Best,
Clara
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