Past Issue

Market Share - Competition Sharpens Focus

By Robert Roman


As competition intensifies in the car wash industry from another wave of investors and growth of existing networks, operators will become more concerned with their market share.

Market share is the share of actual sales in quantity or dollars for a product in a given period and geographical area. Market refers to sales performance of a product class (i.e., conveyor, self-serve, in-bay automatic).

Market share can be expressed as quantity sold or dollars for a company’s product divided by total quantity or dollars for the market.

Estimating shares for a company requires a measure of industry sales. This begins by delineating trade area boundaries and choosing a set of companies that compete against one another.

For example, surveys indicate 40 percent of conveyor customers come from within a three mile radius and 75 percent from within five miles, and most operators compete against three to four other sites, on average.

More difficult than defining relevant boundaries, is estimating industry sales. The principal reason for this is lack of data. However, there are techniques that can be used for this purpose. One method is to gather opinions from several industry experts and then average the results into a consensus.

A survey-of-buyer-intentions method can provide insight by asking consumers about their future purchasing plans and this information can be used to create a forecast.

Sales can also be deduced from indicators that are known to have a high correlation with sales. For example, we use an indicator that is produced with a model that derives expenditure per capita from census data and demography at the block level. Thus, industry sales are calculated as a function of expenditure per capita and population in an area.

The market build-up method estimates sales potential by identifying the number of potential buyers in the market and purchase requirements of each. The data may be published data, primary research like questionnaires or surveys, or sales history.

The market-factor-index method estimates sales by identifying market factors that correlate with market potential and combines them into a weighed index. After calculating sales, market share analysis can be used to analyze the effects of one’s actions in conjunction with the market positions and actions of competitors.

Share analysis can provide managers with information on the structure of the market and competition and the influence of marketing actions on brand performance. Analysis can also be used to determine whether or not it is worth extra marketing effort to increase the company’s market share.

However, the major difficulty in share analysis is estimating shares of competitors (i.e., frequency of use) and the fact that defining trading boundaries is not always simple or precise.

Dealing with these constraints requires subjective judgment of the analyst based on his or her experience and thorough knowledge of products, markets, and competitors.

For example, the total available market would include all sales generated by the industry (i.e., conveyor, in-bay, self-serve wands). The serviceable available market would include only sales generated by the operator’s own segment (e.g., conveyor). Whereas the obtainable market would include only sales the operator could expect to obtain by themselves relevant to the competitive environment.

Consequently, a reasonable expectation of sales might be less than 20 percent or 25 percent of the total available market. This underscores the importance of good information such as census and geo-demographic segmentation to help define population, income, and expenditures.

The consequences of mistakes in defining sales may lead to stores that fail to live up to expectations or missed opportunity by underestimating the number of supportable stores.

Bob Roman is president of RJR Enterprises – Consulting Services ( You can reach Bob via e-mail at


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