Assessment of sales prospects without reference to overall demand growth and a company's strengths and weaknesses in the market place vis-a-vis competitors can result in serious market share erosion without the company being aware of it, especially if sales are on the increase. The market share method arrives at a sales forecast after reviewing marketing plans and assessing the attainable market share.
To apply this method, the company needs to know the total sales of fertilizers in its area of operations. It must identify its competitors and estimate their sales. It must know the marketing strategies of competitors. In some countries the fertilizer industry trade association or the Ministry of Agriculture may publish details of sales by area. From this information it is possible to calculate an individual company's market share. If published information is unavailable, it is possible to identify competitors and their sales through a dealer survey in different territories. The survey can be carried out even by the company's own sales staff utilising their close contacts with the trade. It may also be possible to discreetly ascertain the quantity of fertilizers received at various central warehouses by each competitor. Fertilizer marketing organisations should gather and maintain the following data:
company sales of different fertilizer types in each province;
each competitor's sales of different fertilizer types in each province;
total sales of different fertilizer types in each province.
Once the market share is determined, it is applied to the demand forecast for the next season or year to calculate the company's sales forecast for each province by fertilizer type. It follows, therefore, that this method has to be done in conjunction with a demand forecasting method. Alternatively, the demand forecast by the government or trade association can be adopted as the basis.
The market share approach is simple and practical and is a useful tool to establish short-term sales forecasts by region. In countries where there is no competition and a single parastatal organisation handles all fertilizer distribution, the question of market share does not arise. The market share approach has limited relevance when the supply is evenly balanced against demand, thereby determining each company's sales volume by its ability to procure and supply. This method is thus applicable only when several organisations compete for available demand and when supply is abundant and responsive in relation to demand.
The market share forecast can be carried out as follows:
calculate the company's market share percentage in each province for the previous years and observe the trend, i.e. whether it is maintained, declining or rising.
determine a realistic market share for each province for the following season or year based on past performance and the company's present relative strengths with regard to:
the company's fertilizer procurement programme for the season or year under review as a percentage of the total expected demand.
ability to make the company's fertilizer available on time in the field with reference to the procurement and shipment schedule.
size and impact of the company's promotion programmes.
competitiveness of the company's terms of sale, i.e. price, seasonal discounts, duration of credit, rate of interest.
strength of its distribution structure, i.e. ability to provide easy access to fertilizer at the village level compared to competitors.
This assessment is preferably done by region of the country as competitors' strengths and the company's organisation may not be of uniform intensity in all areas.
based on this assessment the previous year's market share can be modified for the forecast year to determine a realistic, achievable market share.
