Chapter 9 Targeting a Market 161 Copyright Goodheart-Willcox Co., Inc. LO 9.2-4 Sales Analysis After the market segment has been identified and market analysis completed, a sales analysis can be performed. A sales analysis helps a busi- ness forecast future sales. The sales analysis begins with reviewing current and past sales. A business typically evalu- ates number of units sold and dollars generated in sales for the current year and up to five previous years. By evaluating current and past sales, conclusions can be made about whether sales are increasing or decreasing. Businesses can identify any trends that may affect the profitability of the company. This helps the sales team create sales goals for the current year. An important part of analyzing sales is to determine what market potential is available in the current environment. Market potential is the l maximum number of customers and amount of sales that can be generated from a specific segment in a defined time period. Determining the market potential will confirm that sales can be generated from the group of customers in the iden- tified market segment. It must be verified that the marketing decisions made will be profitable before moving forward with the marketing plan. If market potential exists, the business will forecast its portion of the market share in comparison to its competitors. Market share is the e percentage of the total sales that one business has in a specific market. Market share is based on the size of the market. Market size is the total sales per e year for a specific product held by all the competi- tion. Sales can be measured in a number of ways, such as in dollars or number of items sold. Most businesses look at market share in terms of total sales dollars. The market share formula is as follows. (company sales ÷ total sales in market) × 100 = percent market share An example of calculating market share is shown in Figure 9-6. For example, assume the market size for granola bars is $100 million. This means that in one year, total sales of granola bars equal $100 million. Three companies make them. • General Foods, a big company, sells $75 million of granola bars each year its market share is 75 percent. • Country Choice, a medium company, sells $20 million its market share is 20 percent. • Grainy Snacks, a small company, sells $5 million its market share is 5 percent. Radu Razvan/Shutterstock.com A feature of this road bicycle is its titanium frame, which provides the benefit of a lighter weight for faster speed. When have you purchased a product to obtain the benefits of owning it? Goodheart-Willcox Publisher Figure 9-6 This simplified example shows how market share is calculated. Calculating Market Share Data Total Sales in Market = $100 million General Foods Sales = $75 million Country Choice Sales = $20 million Grainy Snacks Sales = $5 million General Foods Formula company sales total sales in market × 100 = percent market share $75 million $100 million × 100 = 75% Country Choice $20 million $100 million × 100 = 20% Grainy Snacks $5 million $100 million × 100 = 5%