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Market Share
Company sales divided by the total sales of all lirms for a specified product-market determines the market share of a particular firm. Market share may be calculated on the basis of actual sales or forecasted sales. Market share can be used to forecast future company sales and to compare actual market position among competing brands of a product. Market share may vary depending on the use of dollar sales or unit sales due to price differences across competitors.
It is essential in preparing forecasts to specify exactly what is being forecast (defined product-market), the time period involved, and the geographical area. Otherwise, comparisons of sales and market share with those of competing firms will not be meaningful.
Evaluating Market Opportunity
Since a company's sales depend, in part, on its marketing plans, management's forecasts and marketing strategy are closely interrelated. Forecasting involves "what if" analyses. Alternative positioning strategies (product, distribution, price, and promotion) need to be evaluated for their estimated effects on sales. Because of the marketing effort/sales relationship. it is important to consider both market potential (opportunity) and planned mar-keting expenditures in determining the forecast. The impact of different sales forecasts must be evaluated from a total business perspective, since these forecasts affect production planning, human resource needs, and financial requirements.