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Magic numbers: the hidden impact of market shares and forecasts.

Market shares and forecasts aren’t simply a representation of yesteryear –they can create market categories. But what analysts don’t always tell you about market numbers is the subjective methodological choices they involve. Mark Twain once said that “Facts are stubborn, but statistics are more pliable.” In our previous blog post, we discussed both the power and limitations of market shares. We explained how assumptions and market models are embedded in the method and subjective choices inform the end result. 

Market shares are actually one of the most impactful research methodologies –beating even landmark evaluations such as the Gartner Magic Quadrant for media impact. Market sizing underpins market shares which act as the basis for market forecasts, thus highly relevant for future business planning. As market shares align to taxonomies, they are a key methodology in category creation. In addition, they are widely referred to by investors, suppliers, the media and tech buyers. Here, we will explain how you can weaponise this method across all 4 impacts of analyst relations and provide advice from the analysts who write market share reports.

Impact #1: market shares and forecasts provide unparalleled insights into competitive dynamics.

Market shares function as the storyline of the technology market, making them an important tool for investor relations. Bo Lykkegaard / IDC explains how “You can read straight out of a market share who the largest players are, who is fast growing and who is losing influence in a given market.” By displaying your performance in a market share report, you can de-risk your company for investors and provide third-party validation that you operate in a thriving market. 

Market shares enable market benchmarking from a like-for-like perspective. Martin Hingley / IT Candor emphasised the value of the objective, outside perspective a market share provides when they create market categories: “It’s someone standing back and showing you objectively how you are doing in the context of others. Even if you find yourself in a failing market, a market share may show that you have failed less than others.” Taking onboard the market assessment and using it to inform your company’s strategy is key. For example, at Unisys / Burroughs Inc. in the 1990s, market shares showed them the decline of check clearing systems. The obvious move here may have been to swiftly exit the market. However, instead, they saw that their business was decreasing less than other companies and decided to position themselves as the leading choice for the remainder of that market’s existence. 

Impact #2: market numbers are on top of the food chain in raising awareness and creating categories.

Industry analysts have immense media presence and those who produce market shares are often cited by journalists. According to Factiva, IDC have been ranked as #1 industry analyst firm in business press mentions for more than a decade. We see this as a direct result of their extensive market share research practice, as journalists appreciate the objective overview that a market share provides. Market Share analysts are those that journalists go to for quotes when they are looking for an overview of the market. Rachel Lashford / Canalys highlights the benefits this brings for vendors “There can be wide press interest in [market share] data, particularly in hot consumer areas, like smartphones, electric vehicles, IoT and cloud. In turn, press exposure influences enterprise and consumer end-users.” 

Market shares are an essential precursor for category creation by sizing market potential for all players and establishing a hierarchy between them. Martin Hingley / ITCandor advises you to pay attention to what is being measured to understand each category in its market context. Analysts who provide commentary on a new market category will help you shape a category and drive the wider conversation around it. Their broad market knowledge makes them excellent advisors for customers considering a new technology purchase. Regular contact with these analysts will ensure you occupy their mindshare and, if your product is good enough, they will likely refer you to clients. They are also a great choice for inbound briefings for vendor sales teams if you need an outside, expert opinion of your market. 

Impact #3: Market insights should inform sales and influence several stages of the purchase funnel.

Market shares provide an overview of all players in the market, enabling smaller vendors to appear in front of purchasing decision makers. Christophe Chalons / PAC notes this as a priority in their methodology: “In many markets, most vendors have less than 1% market share. For me, calculating whether it’s 1.4% or 1.5% is less important than ensuring all vendors are represented, no matter where they come from or how well established they are in the market.” Procurement teams often refer to market shares to ensure a suitable variety of vendors are considered and to look at the growth potential of their vendor choice. A small vendor with good growth in a market share could make an impact on procurement teams and attract sales. 

Use market shares to create battlecards for your sales teams to leverage in client meetings. By positioning yourself as a growing market player, you show customers that you are a safe choice in the industry. If you’re the largest player, your dominance of the market establishes your business as a trusted vendor in the space. Even just showing the overall growth of a market can prove to a potential customer how important this technology area is for their business.

Impact #4: market share writing analysts can do wonders with go-to-market tactics.

The market share format is excellent third-party validation for a go-to-market strategy. As Karsten Weide / IDC put it “the most obvious use for vendors is to include it in a press release.” This is a good opportunity for analyst relations to work with public relations. This tactic has been adopted by Splunk and Salesforce, celebrating their large market ownership on their blogs. At Genesys, market shares are used as a lead generation engine, offering full report access in exchange for an email sign up.

A screenshot of a blog on Criteo's website titled "IDC: Criteo #1 for market share in advertising software"
Source: Criteo.com

A market share can also be used as the foundation for an entire go-to-market campaign. During his time at Criteo, Starsight founder, Ludovic Leforestier, enabled the use of market shares throughout their campaign. They leveraged the results on their blog, pushed it out to the media to gain wider coverage and hosted a webinar with the lead research on their market, Karsten Weide / IDC.  

Analysts top 5 recommendations: be transparent and proactive when working with analysts on market shares.

We asked the analysts who create market shares what advice they would give to vendors on market share participation. Below are a selection of the responses with actionable advice for anyone participating in the research process.

  1. Vendors should participate with what they can. Providing something which is relatively simple at an aggregated level is fine. It’s better to send minimal numbers than nothing at all. – Bo Lykkegaard / IDC
  2. When you look at market shares you have to tell the analysts what you consider as part of that market share and ask what they consider as part of that market share. Each company has its own rules, it’s never comparable and so you have to make sure you are comparing apples to apples. – Christophe Chalons / PAC
  3. What analysts want are very clear numbers, as precisely as possible. Many vendors can’t provide that, but it’s still important to keep in touch with the analysts and brief them to ensure they have the latest information on trends. – Karsten Weide / IDC
  4. Scrutinise analyst methodologies to ensure they understand the process for compiling the information and what it represents. Not all industry analyst company methodologies are the same, or as thorough as others! – Rachel Lashford / Canalys
  5. Base your organisation on market research, not marketing support. Use market shares for competitive analysis, to help you understand what’s already out there and to have definitions of what you want to track – Martin Hingley / IT Candor

Starsight recommendation: Overlook market shares at your peril

Market sizing and forecasting methodologies are versatile and should be leveraged across all four impacts of analyst relations: insights, awareness, sales and go-to-market strategy. Vendor transparency will ensure you are most accurately represented by industry analyst firms and, in turn, equip you as a vendor to fully grasp market dynamics and ultimately weaponise your standing in your category fully. Use those market numbers to help push category creation, get investor buy-in, influence media discussions, equip your sales teams and to provide third-party-validation in your go-to-market strategy.

Many thanks to our contributors for their time and providing their insights for this Starsight Transmission:

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