Market Size Forecasting & Portfolio Strategy

1. The business question:

How will the market evolve, and how will structural changes in demand affect the client’s competitive position?

An electronics retailer wanted to understand the underlying dynamics shaping the German consumer electronics market. Management needed a reliable market size forecast to anticipate market developments, assess market share opportunities and steer commercial planning.

Beyond forecasting overall market growth, the key challenge was to identify the structural shifts behind market performance: changes in product segment composition, competitive positioning and average selling prices (ASP).

Analytical approach:

• Market performance analysis: Analysed value, volume and ASP trends to identify changes in demand, pricing and product mix.
• Competitive benchmarking: Examined market share and segment mix developments across the five leading brands over a five-year period.
• Portfolio and pricing analysis: Evaluated how changes in segment composition and within-segment ASP contributed to overall market and brand performance.
• Predictive modelling: Developed time-series models to forecast market volume and revenue for Q1 2026, using the five-year historical dataset.

2. Key findings & commercial implications

Market dynamics and competitive positioning

• Significant price erosion occurred between April and December 2023. Sell-out volume and revenue growth diverged, indicating substantial downward pressure on average selling prices.

• Brand C achieved a marginal volume market share gain of 0.1 percentage points over 2021–2025. However, Brands A and B delivered relatively stronger performance. Understanding their sources of competitive advantage, as well as Brand C’s positioning against Brands D and E, became a key strategic priority.

Structural shifts in product segment composition

• The market underwent a substantial change in product composition. Brand A successfully strengthened its competitive position by capitalising on the expansion of Segment 1, one of the key growth segments during the period.
• The 2023 price erosion was linked to structural changes in product composition and a divergence between market-wide and brand-level developments. Segments 4 and 5 lost market weight, while Segment 2 gained share. Segments 1 and 3 remained comparatively stable.

• Brand C did not fully capitalise on the changing demand profile. During 2023–2024, it captured only moderate growth in Segments 1 and 2 while maintaining relatively high exposure to Segments 4 and 5, which were losing market weight.

ASP and segment mix decomposition

• The market’s product mix shifted away from Segment 1, which declined by 1.1 percentage points, from 29.5% to 28.4%. This was partially offset by gains in Segment 5 (+0.5 pp) and Segment 4 (+0.4 pp).

• The overall segment mix shift contributed approximately €7.99 to the market’s ASP increase. A further €34.86 came from within-segment ASP increases. Together, these effects explain the increase in market ASP from €528.90 in 2021 to €571.70 in 2025.

• Brand C’s segment positioning remained broadly aligned with the market in Segments 1 and 2, but weakened considerably in Segment 3. Its Segment 2 share increased by approximately 1.4 percentage points, outperforming the market, which declined by 0.3 pp. However, this was partly offset by a 0.7 pp decline in Segment 1.

• Brand C’s changing segment mix contributed only €1.32 to its overall ASP increase, considerably below the market’s positive mix effect of €7.99. Its within-segment ASP effect, however, was comparatively strong at €32.96, only slightly below the market’s €34.86.

Market forecasting and model development

• The initial time-series model delivered 94.6% forecast accuracy for market volume, providing a reliable basis for market size and share planning. Revenue forecasting proved more challenging, with wider uncertainty surrounding the Q1 2026 outlook.

• To improve predictive performance, additional external explanatory variables were collected, including inflation, energy prices, unemployment and business confidence indicators.
• An enhanced time-varying state-space model improved predictive performance by approximately 5%, incorporating macroeconomic and market indicators to better capture changing market dynamics.

3. Strategic recommendations

Based on the findings, three priorities emerged:

• Realign the product portfolio with evolving market demand. Re-balance segment exposure to capture growth opportunities and reduce overexposure to segments losing market relevance.
• Refine the pricing strategy. Adapt price positioning to changing market conditions and segment-level dynamics, balancing ASP development with volume and market share objectives.
• Strengthen premium-segment positioning while protecting volume drivers. Capitalise on increasing demand in premium segments through a balanced portfolio strategy that sustains competitive volume and supports profitable growth.

Overall business impact

The analysis connected market forecasting with competitive and portfolio intelligence, providing management with a more comprehensive basis for market share planning, pricing decisions and strategic portfolio adjustments.