Example #5: Share Change Due to Sales Growth


Volatility and Sales GrowthExample #5: Share Change Due to Sales Growth

Yellow Highlighting=Change from Beginning of Period



Beginning of Period

Customers in Market

Amt Purch from all Suppliers

Primary Supplier

Primary Supplier % of Cust Purch Units of Sale by Primary Supp

Secondary Supplier

Secondary Supp % of Cust Purch Units of Sale by Secondary Supp
Customer A 1500 Supplier 1 60% 900 Supplier 2 40% 600
Customer B 1200 Supplier 1 80% 960 Supplier 2 20% 240
Customer C 1000 Supplier 2 50% 500 Supplier 3 50% 500
Customer D 0 None 0% 0 None 0% 0
Total 3700 2360 1340
Suppliers in Market Amount
Sold
% Total Market Share
Supplier 1 1860 50.3%
Supplier 2 1340 36.2%
Supplier 3 500 13.5%
Total 3700 100.0%

End of Period

Customers in Market

Amt Purch from all Suppliers

Primary Supplier

Primary Supplier % of Cust Purch Units of Sale by Primary Supp

Secondary Supplier

Secondary Supp % of Cust Purch Units of Sale by Secondary Supp
Customer A 2000 Supplier 1 60% 1200 Supplier 2 40% 800
Customer B 1250 Supplier 1 80% 1000 Supplier 2 20% 250
Customer C 1100 Supplier 2 50% 550 Supplier 3 50% 550
Customer D 0 None 0% 0 None 0% 0
Total 4350 2750 1600
Suppliers in Market Amount
Sold
% Total Market Share
Supplier 1 2200 50.6%
Supplier 2 1600 36.8%
Supplier 3 550 12.6%
Total 4350 100.0%


Summary of Changes During Period

Supplier

Change in Unit Sales Volume % Volume Change from Beginning to End Net Unit Volatility in Volume Change Volatility as % of Unit Sales Volume Change

Customer Growth in Volume Change

Customer Growth as % of Unit Sales Volume Change
Supplier 1 340 18.3% 0 0% 340 100%
Supplier 2 260 19.4% 0 0% 260 100%
Supplier 3 50 10.0% 0 0% 50 100%
Total 650 17.6% 0 0% 650 100%

Explanation: The changes during the period take place in Customers A, B, and C. Customer A increases its purchases from 1500 to 2000 units. Customer B increases its purchases from 1200 to 1250 units. Customer C increases its purchases from 1000 to 1100 units. The market grows by 17.6%, increasing 650 units over the 3700 in the beginning period. During the period, Supplier 2 had a faster growth rate than the industry and faster than all of its peers. Supplier 1 also grew faster than the industry. Both of these supplier companies grew their market shares because the very fast growth rate of Customer A offset the very slow growth rate of Customer B, which both suppliers shared. At the same time, Supplier 3 lost market share. The reason for its loss of market share was the slower than market average growth rate of its only customer, Customer C.