In my part-time role as faculty member for a graduate-level Marketing ciriculum, I recently urged my students to practice "marketing math". This is also goes by the phrase "back of the envelope" analysis, and it's the practice of taking available numbers and working with them to further understand a business situation, knowing what you're doing won't stand up to Sarbanes-Oxley level of scrutiny, but will provide some insight just the same. A case in point comes from the recent press announcement from HP (NYSE HPQ) about their recent Digital Press sales success.
Timed just a day before Xerox's earnings announcement (which was noted as lacking hard unit numbers this time around), HP adds this one to a February release along the same lines.
Their announcement reveals that a recent proprietary report from InfoTrends shows HP Indigo Presses taking a market share lead, in 2006, in the US High Volume segment of the digital press business, competing against products from Xerox, Kodak, and Xeikon. The numbers involved are 41.9% (HP Market Share), 49.5% (Market Segment growth rate), 9 percentage points (HP's market share increase), 8 percentage points (HP's market share lead), and then from another source, 40% year-to-year growth in number of impressions.
So pushing around those numbers yields some further interesting results in my "Digital Press Math". First off it's fairly easy to get to a split in the growth between HP and its competitors, showing that HP unit sales grew an astounding 80% year over year, while the collective competition grew at a not-to-be-sneezed-at 34%.
But then things get a little more problematic -- with a 40% growth in impressions year-over-year, and with numbers hovering in that neighborhood for some time now (see my February post, HP Sets Digital Press Records), why would unit growth exceed page growth by so much?
One answer, of course, is the 80% growth in US-only. Another is that new presses don't start cranking out pages immediately, and will grow along with their owners' businesses, over time. One more explanation might be that the 80% growth is more a statistical artifact, which can happen when categories shift, meaning that a product improvement (typically in performance level) causes a new product or version to be slotted into a new category -- the old "easy compare" situation.
I'm not enough of an expert these days on the details of the market to answer further, but it does prove the point, I think, that "marketing math" can be helpful in raising good questions.
Timed just a day before Xerox's earnings announcement (which was noted as lacking hard unit numbers this time around), HP adds this one to a February release along the same lines.
Their announcement reveals that a recent proprietary report from InfoTrends shows HP Indigo Presses taking a market share lead, in 2006, in the US High Volume segment of the digital press business, competing against products from Xerox, Kodak, and Xeikon. The numbers involved are 41.9% (HP Market Share), 49.5% (Market Segment growth rate), 9 percentage points (HP's market share increase), 8 percentage points (HP's market share lead), and then from another source, 40% year-to-year growth in number of impressions.
So pushing around those numbers yields some further interesting results in my "Digital Press Math". First off it's fairly easy to get to a split in the growth between HP and its competitors, showing that HP unit sales grew an astounding 80% year over year, while the collective competition grew at a not-to-be-sneezed-at 34%.
But then things get a little more problematic -- with a 40% growth in impressions year-over-year, and with numbers hovering in that neighborhood for some time now (see my February post, HP Sets Digital Press Records), why would unit growth exceed page growth by so much?
One answer, of course, is the 80% growth in US-only. Another is that new presses don't start cranking out pages immediately, and will grow along with their owners' businesses, over time. One more explanation might be that the 80% growth is more a statistical artifact, which can happen when categories shift, meaning that a product improvement (typically in performance level) causes a new product or version to be slotted into a new category -- the old "easy compare" situation.
I'm not enough of an expert these days on the details of the market to answer further, but it does prove the point, I think, that "marketing math" can be helpful in raising good questions.
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