Measuring Market Share and Demand

For many construction product manufacturers the quarterly forecasts from organisations such as the Construction Products Association and our partner Hewes & Associates are a key indicator of how the market is moving and the impact it could have on their business. But this is a high-level measure and the forecasts can be enhanced to provide a more granulised and specific measure of market share and the demand for your products, allowing more informed decision making.

We work with clients who want this level of information to create an analysis for them which can be updated with each revised issue of the industry construction forecasts. We start with the main sectors of interest to our client and use Barbour ABI to conduct an analysis of current projects in the sector. Taking a representative sample of projects, we then go back to the planning details to identify the size of projects and likely volume of our client’s product that will be used. From this we develop a relationship between project value and volume of product used.

Next a correlation between the forecaster’s sectors and those of interest to our client can be calculated. This may not be a straight link, for example, if the client is only interested in high-rise residential it would be misleading to use forecasted changes to the entire residential sector, much of which is influenced by the large housebuilders and currently showing dramatic decline.

Where possible, we use volume of product not value as this is another area for potential errors. Most products have seen significant price increases applied in recent years which leads to a growth in sales but not necessarily product volume. It is for this reason that the ONS and then the forecasters who use those numbers base their construction market size on 2019 values. So the reported numbers will be significantly down on the figures that Barbour ABI or Glenigan report for projects at today’s values.

When can then link the estimated product volume for the total market and compare this with our client’s sales to estimate market share. If the information is available, current turnover of the principal suppliers to the market can also be used to estimate their market share.

Another pitfall to look out for is that ONS will update their figures for the previous year as much as 12 months later. So, if you compare figures for 2022 now and in the summer forecasts you will probably find that last year’s numbers have changed and hence the forecasted increase/decline for 2023 will change to reflect this.

All of this, including the base ONS statistics and the construction forecasters’ projections are estimates based on samples and should only be treated as an indication. Even the data from Barbour ABI and Glenigan needs to be taken in context as they report on the initial project value and this could change or be spread over more than one year.

But this approach does make the estimates as fact-based as possible allowing your own business to more accurately forecast demand, make investment decisions, understand where you stand in the market relative to your competitors and set realistic targets for the sales team to meet.

If you would like to discuss how we can help you develop a granular approach to forecasting please contact Competitive Advantage for an initial discussion.

Useful Links:

Market Update

Construction Forecasts

Forecasting in Construction

Benchmark Your Construction Marketing Activity

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