Analyzing Market Share
Hey George. Are you busy?
Not at all, Lucas. What's on your mind?
I wanted to ask you some questions about a research report I just read.
It's about the luxury market in India.
Sure. What would you like to know?
The report says the luxury market is growing rapidly,
with more money being spent than ever before.
For example, from 2015 to 2016, the industry saw a growth rate of about 35%.
Well, India's upper middle class has been growing,
which means more people have money to spend on luxury items.
Yeah. And some companies have seen higher sales than ever before.
For example, the company Trendi had a steady sales growth rate of about 9% from 2015 to 2016.
And yet, Trendi's market share decreased from 7% to about 5% over the same period.
Why is that?
Well, you can't only consider the revenue generated by Trendi.
You need to compare it with sales for the luxury industry as a whole.
Do you mean dividing Trendi's total sales revenue by total industry sales?
Yes. Also look here.
In 2015, Trendi grew by 8%, and the industry grew by 32%.
In 2016, the industry grew by more than 30%,
while Trendi's sales only increased by 9%.
In other words, Trendi wasn't keeping pace with the industry.
So while Trendi was gaining sales, it was actually losing ground in the market?
Exactly.
I think Trendi has to change its business strategy to appeal to new customers.
How might it do that?
By diversifying its product line or appealing to new demographics, it might be able to reclaim some of its market share.
But we'll have to wait and see.
I'm not Trendi's CEO, after all.
Hmm... The market's really getting competitive.
I'm excited to see what Trendi will do next!
Me too.
Questions
What is the research report about?
>it's about the luxury market in India.
The luxury market in india is growing...
>rapidly
The report says the luxury market is growing rapidly, with more money being spent than ever before.
Why has the luxury market in growing so quickly?
>India upper middle class has been growing.
Some companies have seen higher sales than ever before.
What happened to Trendi between 2015 and 2016?
>sales increased, but its market share decreased.
What does he ask George?
>Why some companies have been growing revenue but losing market share.
The company Trendi had a steady sales growth rate of about 9% from 2015 to 2016.
How is the company's market share calculated?
>dividing its total sales by total industry sales.
Why did Trendi's total market share decrease/
>The industry grew faster than Trendi's total market sales.
In 2016, the industry grew by more than 30%, while Trendi's sales only increased by 9%.
What does he think Trendi has to do to appeal to new customers?
>change its business strategy.
If Trendi appealed to new demographics,...
>it might improve its market share.
By diversifying its product line or appealing to new demographics, it might be able to reclaim some of its market share.
How does he feel about Trendi's future?
>excited
How will Trendi change its strategy?
>they don't know yet.
