Name: 

Market segments are groups of customers within a market that have similar needs.  Marketers need to know how big the segments are relative to the total market and whether or not they are growing in order to help determine which one(s) to target. 

Segment Size

Just as market size is difficult to estimate, it is also difficult to estimate segment size.  Thus, many companies purchase segment size estimates when they purchase market size estimates from organizations such as the Print Measurement Bureau and A.C. Nielsen.

Segment Share

Once marketers have segment size information, they can use it to help evaluate the attractiveness of the segments in a market.  An important calculation is segment share, which clarifies the relative importance of each segment in the market.  For example, if PMB finds that, of the 20 million people in Canada who drank soft drinks in 2002, 13,567,935 drank regular soft drinks and the rest drank diet soft drinks, we can determine that regular soft drinks have a 67.8% share of the overall soft drink market, while diet soft drinks hold a 32.2% share. 

The formula for segment share is:

=   Segment share (percentage of market size).  

Calculate the following using the above formula.

If 5,850,000 people bought a new car last year and 756,789 of these people bought sub-compacts, what share did sub-compacts have of the new car market last year?

If 350,000 men bought engagement rings for their girlfriends in 2002, and 201,600 of these rings were made from gold, 84,700 were made from platinum, and 63,700 were made from silver, what were the gold, platinum, and silver segment shares of the engagement ring market in 2002?

Complete the following chart by calculating the shares of the liquid detergent segment for the past 3 years.  What conclusions can you draw from this data?

	Year 1	Year 2	Year 3
Total Detergent Market Sales (in cases)	2,976,000	3,125,000	3,250,000
Liquid Detergent Segment Sales (in cases)	687,456	825,000	955,500
Liquid Detergent Segment Shares

Segment Growth Rate

Marketers typically also calculate the growth rates of the individual segments in order to understand each segment’s trend and to help forecast what is likely to happen to it in the future.  The formula for segment growth rate is the same as the formula for market growth rate, but segment information is used instead of total market information.  The segment growth rate formula is:

     Segment size estimate for one year
=   percentage change versus year-ago.  

Like market growth rates, segment growth rates are not always positive. Determining a negative segment growth rate follows the same procedure as determining a negative market growth rate.  In other words, you follow the formula of dividing the segment size for one year by the segment size for the prior year, but subtract your answer from 100.

The following series of questions allows you to calculate and analyze positive and negative segment growth rates in conjunction with segment share estimates.

If 201,600 gold engagement rings were sold in 2002 compared to 193,645 rings the year before, what was the segment growth rate of gold engagement rings in 2002?

If 84,700 platinum engagement rings were sold in 2002 compared to 82,350 rings in 2001, what was the segment growth rate of platinum engagement rings in 2002?

If 63,700 silver engagement rings were sold in 2002 compared to 67,525 rings in 2001, what was the segment growth rate of silver engagement rings in 2002?

Complete the following market and segment information chart.  Use the calculations you made above and make new calculations to fill in the remaining blanks.  Note: You have to use formulae you learned in both the Chapter 3 and Chapter 4 math exercises.

	2000	2001	2002
Total Engagement Ring Market Sales (in units) Market Growth Rate	341,267 +0.6%	_________ +0.7%	350,000 ____
Gold Segment Sales Segment Share  Segment Growth Rate	189,400 ____ +1.5%	193,645 56.4% ____	201,600 ____ ____
Platinum Segment Sales Segment Share Segment Growth Rate	81,000 ____ +1.5%	82,350 24.0% ____	84,700 ____           ____
Silver Segment Sales Segment Share Segment Growth Rate	70,865 ____ -3.0%	67,525 19.6% ____	63,700 ____           ____

Is the information in the chart sufficient to make a decision regarding which engagement ring segment(s) to target in 2003?