The Right Market Research

Tracking the success of each store you operate and the stores’ share of their markets requires extensive research. Golfsmith International, an Austin, TX-based cataloger/retailer of golf equipment, looks at myriad factors before projecting the annual revenue for each of its stores.

“Each store owns a percentage and is individually given a profit-and-loss amount, advertising budget, and individual strategic plan — all based on location and competition and market share in a given market,” says Bob Hermansen, director of Internet and catalog marketing.

To determine these metrics, Golfsmith works with Kissimmee, FL-based market research firm Golf Datatech, which provides such information as number of golf rounds played year over year in more than a dozen regions across the U.S., market share, prices, and inventory and distribution of golf products through a network of sporting-goods stores and mass merchants.

“If we see that, say, golf rounds played are up 5%, we then use the data we have and can figure out what that means for us,” says Jim Loden, Golfsmith’s vice president of store operations. “Then when we look at a region one of our stores is located in, we can calculate what portion of the market the store has. You have to do a little fuzzy math, since the data covers regions of the country” rather than every town.

Although the kind of data that Loden uses with Golfsmith is entirely golf-equipment related, he says that retailers in other markets can conduct similar research.

For instance, when Loden worked with computer products retailer Comp USA, he says, he received most of his data from computer processor manufacturer Intel. “Intel owns a majority of the computer processor market among computer manufacturers,” Loden says, “so it usually knows market share.”

As for other retail industries, “you might say ‘Brand X is our largest-selling vendor. In Arizona, Brand X says it has sold this much, and we’ve sold that much,’” Loden says. “Then we can figure out our market share in Arizona based on those figures.”

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