Using Market Concentration

Teaching Notes for this Activity

In this activity, students look at the output from a market share (market concentration) spreadsheet and attempt to interpret the results and consider the how it may affect marketing decisions.

Additional Resource: Guide to Market Shares, with free Excel templates

Student task

Review the following table, which shows the unit market share and the market concentration for a market with 15 brands in the marketplace – and then answer the questions at the end.

market concentration


  1. Given that there are 15 brands in this market, do you think that there is a heavy, medium or light degree of market concentration in this market?
  2. Which metric – for a 15 brand market – is more suitable for measuring market concentration (top 3, 4 or 5 brands)?
  3. Would your choice of the most appropriate metric for market concentration (from Q2) make a significant difference to your response to Q1 above?
  4. How is the Herfindahl index measured? What advantage does this index have over the other market concentration metrics?
  5. If a market is heavily concentrated – then what are the marketing implications for:
    • retailer/distribution access,
    • role of brand equity, pricing,
    • product range/mix?
  6. How can a smaller player/brand successfully compete in a highly concentrated market?