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.