Example #6: Share Change Due to Volatility

Volatility and Sales GrowthExample #6: Share Change Due to Volatility

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	1500	Supplier 1	60%	900	Supplier 2	40%	600
Customer B	1200	Supplier 1	50%	600	Supplier 2	50%	600
Customer C	1000	Supplier 2	80%	800	Supplier 3	20%	200
Customer D	750	Supplier 3	60%	450	Supplier 2	40%	300
Total	4450			2750			1700
Suppliers in Market	Amount Sold	% Total Market Share
Supplier 1	1500	33.7%
Supplier 2	2300	51.7%
Supplier 3	650	14.6%
Total	4450	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	-360	-19.4%	-360	100%	0	0%
Supplier 2	960	71.6%	960	100%	0	0%
Supplier 3	150	30.0%	150	100%	0	0%
Total	750	20.3%	750	100%	0	0%

Explanation: In this example, the changes during this period affected Customers B, C, and D. The first major change in the industry was the entrance of Customer D, which purchased 750 units. Customer D allocated 60% of those 750 units purchased to Supplier 3 and 40% to Supplier 2. Both of those suppliers then experienced Positive Volatility from the entrance of Customer D. At the same time, Customers B and C changed their percentage purchase allocations. Customer B reduced its purchases from Supplier 1 from 80% down to 50%, producing a Negative Volatility event for Supplier 1. Customer C increased its share of purchases from Supplier 2 from 50% to 80% producing another Positive Volatility event for Supplier 2. Overall, then, Volatility caused Supplier 1 to lose market share while Suppliers 2 and 3 gained share. Supplier 1 had Net Negative Volatility of 360 units, while Supplier 2 had Net Positive Volatility of 960 units, and Supplier 3 had Net Positive Volatility of 150 units. In this example, Volatility accounted for all of the changes in market shares in the market.